Why Plug Power Stock Skyrocketed This Week

Key Points

• Plug Power stock roared higher thanks to the Federal Reserve's decision to cut interest rates.

• Fed leadership suggested that more rate cuts are coming.

• Lower rates could benefit Plug Power stock on multiple levels.

• 10 stocks we like better than Plug Power ›

Plug Power (NASDAQ: PLUG) stock soared in this week's trading. The hydrogen fuel cell specialist's share price bounded 44.1% higher across the stretch. Over the same period, the S&P 500 rose 1.2%, and the Nasdaq Composite rose 2.2%.

Plug Power's valuation rocketed higher this week, thanks in large part to the Federal Reserve's move to cut interest rates by a quarter of a percentage point. With the gains, the stock is now up 91% over the last three months.

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Plug Power surges with new rate outlook

Plug Power stock posted big gains this week, thanks to the Federal Reserve cutting the U.S. benchmark interest rate by a quarter of a percentage point and indicating that two more cuts are coming this year. The lower rate could allow Plug Power to restructure its debt and set up lower interest payments. Speculative stocks also tend to perform better when rates are lower, and investors saw the rate shift as a major positive catalyst for Plug Power.

What's next for Plug Power?

Plug Power has been securing some new partnerships and expanding some areas of its hydrogen fuel-cell business, and the opportunity to refinance its debt at lower interest rates could help strengthen the company's financial foundation. On the other hand, the timeline for a potential shift into profitability remains highly uncertain.

While the business managed to post roughly 21% year-over-year revenue growth last quarter, its sales performance has tended to be highly uneven. Plug Power does have avenues for posting big growth over the long term, but the stock continues to look like a very risky proposition, even in a lower interest rate environment.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.