Shares of a hydrogen fuel cell company Plug in the power (NASDAQ: CAP) continued to soar today. Over the past five trading days, the stock has surged more than 25%. There have been several catalysts for the stock’s recent rise. That includes today’s 17.8% jump as of 11:50 a.m. ET.
Making green hydrogen
Plug Power stock had plunged as it implied bankruptcy was a real possibility when it issued a “going concern” warning with its third-quarter report in November. But shares rebounded after Plug provided a trading update last week. In this update, management announced that it has begun operating its new green hydrogen plant in Georgia. It is now the largest liquid green hydrogen plant in the United States.
This progress led Roth MKM analyst Craig Irwin to upgrade Plug Power stock today and double that company’s price target to $9 per share. This stock price target helps explain today’s move, as it would represent a gain of more than 140% from yesterday’s closing price.
Getting out of a financial hole
Plug burned through cash as delays affected its hydrogen production plans, forcing it to buy hydrogen on the open market. But the new Georgia plant could help reduce costs and generate more revenue.
A large American steelmaker yesterday highlighted a use case for this hydrogen when Cleveland–Cliffs discussed its use of hydrogen in steelmaking. Cliffs CEO Lourenco Goncalves said that company’s fourth quarter conference call that “hydrogen is the real game-changer in iron and steel making.” He also noted: “The United States is closer than anyone to becoming the first country in the world with abundant and competitively priced green hydrogen to support a true green industrial revolution. »
The new Plug Power facility is expected to benefit from this demand. This helps explain the renewed optimism about Plug Power and its stock today. However, the company still has a long way to go before turning a profit from its hydrogen production projects. Investors should be aware of the risks involved even as the new production facility ramps up.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Mad Motley has a disclosure policy.
Why Plug Power Stock Jumped Again Today was originally published by The Motley Fool
