Plug Power Plugs a Big Hole in Its Liquidity. Is It Time to Buy?
Plug Power (NASDAQ: PLUG) has gotten crushed in recent months due to liquidity concerns. The hydrogen stock has plunged nearly 80% over the past year as investors started fretting about how the money-losing company would fund its operations and bold expansion plans. Last fall, it issued a stark warning stating it was "projecting that its existing cash and available for sale and equity securities will not be sufficient to fund its operations through the next twelve months."
However, Plug Power has since unveiled plans to raise $1 billion in equity capital through an at-the-market (ATM) program. It's also finalizing a term sheet with the Department of Energy (DOE) for a $1.6 billion loan facility. These moves should help shore up its liquidity. Here's a look at whether they make the hydrogen stock a buy.
Plug Power has taken two important steps to shore up its liquidity. It aims to tap the equity markets to raise up to $1 billion in equity over the coming months through an ATM program. That will enable it to sell shares when it needs cash to fund its operations and capital projects. This approach of issuing shares over time (instead of all at once) could help mute the dilutive impact of the sales. If the company sold all that stock in one block sale, it would increase its outstanding shares by a whopping 60%. The hope is that Plug Power can sell more stock in weeks when it's rallying to reduce the total number of shares issued.
Source Fool.com
