Plug's agent B. Riley has the incentive to short Plug's shares as soon as Plug provides a 'commitment advance notice', leading to selling pressure on Plug's stock
Plug Power: The Importance Of The March 1 Q4 Results Feb. 24, 2024 ….. Plug's agent B. Riley has the incentive to short Plug's shares as soon as Plug provides a 'commitment advance notice', leading to selling pressure on Plug's stock ….. With an average daily volume of 54.44M and 27 trading days since the 17th of January, this gives us a total volume of 1,470M. So in our scenario of a maxed-out facility, this means that Plug's sales could be a percentage of 2.9% of the total volume during the time when the ATM facility was active. This does not look like a big deal, but mind you that this 2.9 percent is sales only, while the market is balanced by definition (if there are more shares offered for sale than there are demanded for purchase, the price simply drops). Adding insult to injury is that Plug is a seller at literally any price, comparable with a no-limit order. As such, the recovery of Plug Power's share price since the 23rd of January has been a double blessing for its shareholders, as the company needs to sell double the amount of stock at a $2 share price than it needs to do at $4.
As I already mentioned earlier, on 'up' days, Plug's volume of number of shares traded has often been high since the 17th of January, but on 'down' days it has been relatively low. This could be heavily influenced by the ATM facility. If Plug sells $10M of its shares on an 'up' day with a volume of 100M, its 4M of volume is only 4 percent. But if Plug sells $10M of its shares on a down day with only 40M of volume, its share of daily volume is as high as 10 percent. This makes fluctuations on low volume days likely as a result of the ATM facility, and could aggravate share price drops.
Note: of course, this exercise is purely theoretical. B. Riley is likely already shorting Plug's stock before Plug uses the ATM facility, but B. Riley also has to initiate its short position sometime, which the company has likely done in a professional manner. So the average daily volume matters much more than the volume on a single day during which Plug exercises the ATM facility to the max, even if this is a day with low volume. B. Riley will likely spread out its sales (or the initiation of a short position) over the week. Both B. Riley and Plug Power have an incentive to create high liquidity and high volume, as this will make it easier to get a bunch of sell orders filled on the open market for a predictable price. I also expect B. Riley to be more willing to allow Plug to use the facility on multiple consecutive days if the market volume is high.
Short interest
Plug Power's short interest was already high, but after the announcement of the ATM facility it took a sharp turn upwards, as you can see in the graph below. It could be that this was because B. Riley opened short positions in Plug's stock, which it would likely be wise to do, but it could also be that other investors opened new short positions or started hedging. ….. https://seekingalpha.com/article/4673139-plug-power-the-importance-of-the-march-1-q4-results
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