Plug Power Inc (PLUG)

[B_B!]

Plug Power: Abysmal Results But Upgrading On Strategy Shift And Improved Market Sentiment
Mar. 03, 2024 Henrik Alex

• Last week, struggling fuel cell systems, electrolyzer solutions, and green hydrogen provider Plug Power released another set of abysmal financial results.
• Consolidated gross margin eclipsed negative 100% after auditors required the company to increase inventory provisions substantially.
• Free cash flow for the full year was negative $1.8 billion thus resulting in year-end liquidity decreasing to just $135 million.
• Since January 17, PLUG has raised more than $300 million in gross proceeds from open-market sales. The resulting shareholder dilution calculates to 11.5%.
• Considering sufficient access to capital, a new focus on cash burn reduction as well as vastly improved market sentiment, I am upgrading Plug Power's shares from "Sell" to "Hold".
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In 2024, the company expects to focus on reducing cash burn by more than 70% through a combination of capex reductions, working capital benefits and margin improvements.
While some of these measures will impact the company's short-term growth prospects, management still anticipates sales to increase on a year-over-basis due to improved contributions from new business segments like electrolyzers and liquefaction technology.
With highly speculative stocks experiencing strong demand again, funding the business with additional open market sales should not be an issue for Plug Power anymore.
Should the company come even close to management's stated cash burn reduction target for this year without major revenue contraction, I would expect market participants to regain some confidence in Plug Power's long-term prospects after more than a decade of overpromising and underdelivering.
In addition, a near-term conditional loan guarantee approval by the DOE could provide a strong catalyst for the stock.
Consequently, I am upgrading Plug Power's shares from "Sell" to "Hold".

https://seekingalpha.com/article/4675601-plug-power-abysmal-results-upgrading-on-strategy-shift-improved-market-sentiment