Why Shares of Plug Power Have Soared 81% So Far in 2019

It's not only management's promise that profitability -- of sorts -- lies around the corner that has electrified investors' hopes this year.

Scott Levine
Scott Levine
Jul 3, 2019 at 12:50PM
Energy, Materials, and Utilities

What happened

Reversing course from the 48% plunge they experienced in 2018, shares of Plug Power (NASDAQ:PLUG) have risen more than 81% through the first six months of 2019, according to data from S&P Global Market Intelligence. Besides management's auspicious outlook for the company's future and its commitment to strengthening its relationship with shareholders, several optimistic nods from Wall Street provided investors with inspiration to push shares higher.

So what

Plug Power wasted little time in the new year before stoking investors' hopes. In an early January business update, management forecast it would report 2018 gross billings (revenue before the removal of provisions for common stock warrants) of $182 million to $185 million -- about 40% higher than what it reported in 2017. But the excitement this roused was surely eclipsed by the figures related to 2019. In the update, Plug Power forecast 2019 gross billings of $235 million to $245 million and positive adjusted EBITDA for the full year.

A financial chart trending upwards.

Image source: Getty Images.

Extending through February, investors' enthusiasm continued into March, a month in which shares ripped 34% higher. While the company's release of its Q4 2018 earnings report provided some of the cause for the bullish activity, management's apparent desire to fortify its relationship with investors motivated them even further. Sticking to his words -- as articulated in a mid-January blog post on the Plug Power website, in which he stated his intent to adopt a 10b5-1 stock trading plan -- Andy Marsh bought 12,286 shares at an average price of $2.44 on the open market, representing a $30,000 transaction. For investors the action spoke volumes, as there are few greater signs of management's confidence than when it puts its money where its mouth is.

An additional factor in the stock's movement throughout the first half of 2019 was the bullish tide of sentiment revealed by several Wall Street analysts. Following Plug Power's business update in January, for example, Carter Driscoll, an analyst at B. Riley FBR, reiterated his buy rating on the stock and identified a $3.50 price target, according to Thefly.com. Another analyst at B. Riley FBR reiterated the buy rating and price target in March. More recently, an analyst at H.C. Wainwright revealed similar optimism, maintaining a buy rating and assigning a $4 price target.

Now what

For those familiar with Plug Power, the stock's rapid rise in 2019 should come as little surprise, as its history is replete with periods of wild price swings. Specifically, 2019 is shaping up to be similar to 2017, a year in which the stock nearly doubled. While it'll be interesting to see what shares do in the second half of the year, I'll be more interested to see if the company rebounds from its lackluster Q1 performance and ultimately achieves its 2019 forecasts regarding gross billings and adjusted EBITDA.