By Plug Power stock price has pulled back and moved into a bear market, erasing some of the gains made in September and October. PLUG has retreated by over 50% from its highest point this year, lowering its market cap from $4.8 billion to $3.12 billion. So, is it safe to buy the PLUG stock dip?
Plug Power stock price technical analysis
The daily timeframe chart shows that the PLUG stock price bounced back from the YTD low of $0.6850 to a high of $4.58. This surge happened as the company announced some notable deliveries, including a 5 MW electrolyzer installation for Hollandia for the H2Cast Project.
These gains were relatively short-lived as the stock plunged by double-digits. It has now plunged close to the 61.8% Fibonacci Retracement.
Plug Power stock has moved below to 50-day Exponential Moving Average (EMA) and the Strong, Pivot, Reverse level of the Murrey Math Lines tool.
The stock has moved below the Supertrend indicator, a sign that bears are in control for now. It has also dropped below the Ichimoku cloud, while the Relative Strength Index (RSI) and the MACD have all continued moving downwards.
Therefore, the most likely scenario is where the stock continues falling, potentially to the next key support level at $1.56. This support is an important level as it is along the Ultimate Support of the Murrey Math Lines tool and is slightly above the 78.6% Fibonacci Retracement level.
Still, there is a slim chance that the PLUG stock price will bounce back as investors buy the recent dip. Such a move will push it to the Major S/R pivot point of the Murrey Math Lines tool at $3.13.
PLUG stock price chart | Source: TradingView
Plug Power losses are a concern
The main bearish catalyst for the Plug Power stock price is that its business continues to lose substantial sums of money.
A report released last week showed that its net revenue rose to $177 million in the last quarter from the $173 million it made in the same period last year.
Its revenue growth was driven by its electrolyzer business and the robust volume of its hydrogen business. Electrolyzer sales dropped to $96.7 million from the previous $107 million.
The power purchase agreements’ revenue rose to about $24 million, while the fuel delivered to consumers rose to $35 million. Its CEO said:
“Plug continues to execute, follow through on its commitments, and prove the viability of hydrogen at scale. We’re seeing real adoption, real projects, and real performance, and we’re still only getting started.”
While its revenue growth was encouraging, the company continued to lose millions of dollars. Its operating loss jumped to $228 million from the previous $116 million, while its net loss was $363 million. The net loss in the first nine months of the year rose to nearly $800 million.
As such, while the company has a high backlog, it has been unable to convert this into positive profits. It is unclear whether the management will hit the cash flow metrics it set a few months ago at the JPMorgan Industrials Conference.
The other main risk for Plug Power is that it may need to raise additional cash if its losses accelerate. It ended the last quarter with $165 million in cash and equivalents and $189 million in restricted cash.
Additionally, the company continues to face substantial pressure from short-sellers, who continues to bet against its execution. The short interest has moved to 22%, making it one of the most shorted companies in Wall Street. Still, this also means that the company may go through a short-squeeze, as it happened a few months ago.
READ MORE: Plug stock skyrockets 22% today: 5 key reasons behind the rally
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