Plug Power is using rising investor interest in hydrogen technology to fund growth. The company announced a secondary stock offering Monday evening.
Plug (ticker: PLUG) plans to raise $750 million.
Shares are down 6.3% in after-hours trading. Shares often trade lower after secondary stock offerings are announced. Large blocks of stock are typically sold at a discount. What’s more, secondary offerings means more stock supply for the market to absorb, and that each previous share will own a smaller piece of the company.
The sale appears well timed. Shares hit a 52-week high Monday. Plug stock is up 691% in 2020 and 119% over the past three months. Those returns aren’t really comparable to the Dow Jones Industrial Average and S&P 500. They are far better.
Despite the strong returns, analysts are still bullish on Plug stock. Nine out of 10 analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the Dow is about 58%.
The strong stock price performance has left analysts playing catch up though. The average analyst price target is about $23, below the $25 level where shares closed at on Monday.
Plug ended the third quarter with more than $700 million in cash and $300 million in long term debt and convertible notes.
The company says it intends to use the proceeds for “general corporate purposes.” That’s typical language. The company’s long term goal is to build a green hydrogen company. Cummins (CMI), Nikola (NKLA) and players such as Plug are investing in hydrogen fuel cell and hydrogen gas production technology to help wean industry off fossil fuels.
Write to Al Root at [email protected]
