What happened
Plug Power (PLUG 6.83%) stock didn't have much juice on the second-to-last day of the trading week. Shares of the hydrogen fuel cell specialist closed Thursday nearly 9% lower after the company disclosed plans for a new capital-raising effort.
So what
Plug Power divulged the fresh initiative in a regulatory filing, but the details and specifics were sparse. The company will float one, several, or all of the following: common stock, preferred stock, warrants, debt securities, and units (typically, combinations of two or more different securities).
Plug Power was only slightly more forthcoming about what it intends to do with the proceeds of these issues. They will be utilized for the ever-popular "general corporate purposes," which the company said could include activities such as acquisitions, capital expenditures, and stock buybacks.
As of the end of March, the company had just over 578 million shares of common stock outstanding.
Now what
Investors usually get spooked when informed that their company might be gearing up for a dilutive share issue.
It's important to note here that although issuance of common stock is a likely possibility (since it's relatively quicker, easier, and brings in less burdensome financing than issuing debt instruments), it's not certain that's the way Plug Power will go. Even if it chooses a purely debt-based route, though, that would still affect the company's fundamentals.
That said, we'll need to know more specifics about the company's capital-raising plans -- their amounts, forms, and timing, mainly -- before we can judge what kind of impact they might have on Plug Power. It's unwise to exit a stock position in a company merely on the vague news that it's seeking more capital.
