Plug Power (NASDAQ:PLUG), a clean hydrogen and fuel-cell solutions provider, closed at $1.45, down 7.05%. Price target cuts from Susquehanna and Morgan Stanley pressured shares, and investors are watching hydrogen adoption and guidance.
Trading volume reached 81.5 million shares, coming in about 52% above its three-month average of 53.7 million shares. Plug Power IPO'd in 1999 and has fallen 99% since going public.
The S&P 500 (SNPINDEX:^GSPC) fell 1.11% to 7,719, and the Nasdaq Composite (NASDAQINDEX:^IXIC) fell 1.88% to 26,693. Concern also spread to peers in clean hydrogen, fuel cells, and zero-emission power solutions. Bloom Energy closed at $239.38, down 9.14%, and FuelCell Energy closed at $14.16, down 8.65%.
Susquehanna cut its Plug Power price target from $2.50 to $1.75 per share, while Morgan Stanley lowered its target from $1.65 to $1.20.
The revisions come amid growth concerns for the alternative energy sector ahead of Q3 reports. Investors will need to watch what Plug says about challenges related to margins and cash flow. Plug Power said gross margin improved to approximately breakeven in Q2, so that trend needs to continue.
Concerns also persist for renewable and power equipment suppliers in a higher-rate environment. Plug Power has debt obligations that include convertible debt instruments, long-term debt, and various lease obligations.
The company faces ongoing net cash usage, but created some breathing room late last year by refinancing convertible notes and retiring short-term debt with a capital raise, issuing 2033 convertible notes. Investors need to focus on whether Plug's trend toward positive gross margin and revenue growth continues when it reports Q3 results on Nov. 9.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy. The Motley Fool has a disclosure policy.