Plug Power (NASDAQ: PLUG) shares have been trading sideways in recent weeks, but the stock remains firmly in bear-market territory, down 47% from its May high. The stock was last seen at $2.26, giving the hydrogen fuel cell company a market capitalization of roughly $3 billion. Despite ongoing turnaround efforts, short interest has climbed to 23.46%, according to Benzinga, while a separate report from Seeking Alpha puts it at 20%. This elevated short interest reflects persistent skepticism among traders about the company's ability to reverse its fortunes.
Short sellers remain active despite revenue growth
The increased shorting comes even as Plug Power's latest earnings report showed modest revenue growth. In the second quarter, the company generated $178 million in revenue, up from $173 million in the same period last year. For the first six months of the year, revenue reached $341 million, compared to $307 million in the prior-year period. This growth indicates continued demand from major customers like Amazon and Walmart.
Much of the growth was driven by the company's services segment, which saw revenue soar to $29.8 million in the second quarter, up from $16.3 million a year earlier. Over the first half of the year, this division brought in more than $51 million. Power purchase agreements contributed over $26 million, while fuel delivered to customers totaled over $39 million. However, these gains were partially offset by a significant decline in equipment sales, which fell to $81.8 million.
Profitability remains a key concern
Plug Power is also working to improve its bottom line. The company's net loss in the second quarter narrowed to $190 million, largely due to a change in the fair value of convertible debt instruments. Interest payments during the quarter amounted to over $16 million. The persistent losses and ongoing capital needs have fueled concerns about further dilution.
Indeed, Plug Power's outstanding shares have surged to over 1.39 billion, up from 1.12 billion in the same period last year. In 2022, the company had just 577 million shares outstanding. This rapid share count expansion is a primary reason why short sellers remain active, as they anticipate continued dilution to fund operations.
Analysts see revenue growth ahead
On the positive side, analysts project that Plug Power's revenue will continue to grow. For the current fiscal year, revenue is expected to increase by 15.3% to $819 million, followed by $968 million next year. This growth outlook is supported by the company's expanding service and fuel businesses, as well as its strategic partnerships.
However, the technical picture suggests that the stock may face further downside. The daily chart shows PLUG trading within a narrow range, forming an ascending channel that is part of a larger bearish flag pattern. This pattern often precedes a bearish breakout. The stock remains below its 50-day moving average, and the Percentage Price Oscillator (PPO) has dipped below the neutral level.
Given these technical signals, the stock is likely to experience a bearish breakout, potentially targeting the key support level of $1.87. A move below that level could open the door to further declines, possibly toward $1.50. Traders are watching these levels closely as the company continues its turnaround efforts.
For context, other energy-related stocks have shown mixed technical patterns recently. For instance, Bloom Energy's recent rally highlights the volatility in the clean energy sector, while AMD's bullish flag pattern contrasts with the bearish setup in PLUG. Investors should also consider broader market trends, such as macroeconomic pressures that could impact risk assets.
This article is for informational purposes only and does not constitute financial advice.
