When Plug Power (PLUG 1.26%) reported earnings last week, investors got some mixed messages about the company: On the one hand, Plug missed sales and earnings estimates in 2023, losing $2.30 per share for the year (which is bad news). On the other hand, Plug cited plans to create and sell $1 billion worth of new stock, and to secure a new $1.6 billion loan from the Department of Energy, as giving it sufficient "liquidity" that there is "no longer substantial doubt of the Company's ability to continue as a going concern" -- which is good news.
After selling off initially on the loss, Plug Power ended the day in the green. And according to investment banking firm Craig-Hallum, this is only the beginning. Roughly one year from now, claims this banker, Plug Power stock (currently trading just under $4 a share), could be worth $5 a share -- a 25% upside for new investors.
Is Plug Power stock a buy?
Is Craig-Hallum right in their analysis? Anything is possible, but to be perfectly honest, I'm not too keen on Plug Power's prospects to reward investors.
Don't get me wrong. Both Plug and Craig-Hallum are almost certainly correct that the company can now "continue as a going concern" -- so long as people keep giving it money to burn. Plug burned $1.8 billion in cash last year, so if Plug sells $1 billion in cash and gets $1.6 billion more in loans from the government, that should be enough money to keep Plug in business for the next 18 months.
Even if Plug doesn't get its loan, and only just creates and sells a bunch of new shares, $1 billion in cash from that stock offering should suffice to keep the doors open for the next couple of quarters, at least.
The fact is, Plug Power has managed to remain in business for more than 25 years of never earning a profit. It's also lost 99.7% of its value over the last 25 years, though, impoverishing every investor who ever sunk money into the company.
Is Plug stock a buy? I think not.
