Plug Power Inc (NASDAQ:PLUG) tumbled by as much as 45% in 2018 despite rallying by more than 80% in 2017. Fast forward, the stocks sentiments have turned positive triggering a 30% plus rally from all-time lows. The bounce back comes at the back of strong trading volume as the bulls continue to take the fight to the bears.
Plug Power Price Analysis
2019 is slowly turning out to be an inflection point for Plug Power if recent price action activity is anything to go by. Improvement to the company’s next generation technology as well as an aggressive push for market value in China has once again reaffirmed the company’s growth metrics.
The company is fresh from reporting a 40% increase in revenue in 2018. The management has also reiterated that the company will turn in some profits in 2019, after posting wider than expected net loss last year. The management has since embarked on a cost-cutting drive as well as improving deficiencies as part of the ongoing restructuring.
Investors’ confidence has since started inching higher, depicted by high turnover in traded shares in the market. A spike of more than 30% from all-time lows could as well affirm an inflection point in the direction of trade.
After the recent spike higher, the stock faces immediate resistance at the $1.60 level. A rally followed by a close above the critical resistance level should open the door for the stock to make a run for the $2 a share handle
Plug Power needs to rally and close above the $2 a share level to affirm an end to a sell-off wave that had pushed it to all-time lows. Below the $1.80 level, the stock remains susceptible to further drops back to all-time lows.
About Plug Power
Plug Power casts itself as an alternative energy technology provider focused on the design development and commercialization of hydrogen and fuel cell systems. The company specializes in proton exchange membrane fuel cell and other fuel processing technologies.
Why is Plug Power Rallying?
A spike in share price and trading activity comes on Plug Power reiterating it is laser-focused on turning cash flow positive in 2019. The fuel cell manufacturer has embarked on a cost-cutting drive in response to a wider than expected net loss in 2018. The company is also exploring new ways of enhancing efficiencies as well as targeting bigger customers for its products, in pursuit of profits from its material handling business.
The stock continues to spike on the management reiterating they expect revenues for 2018 to come in 40% higher, compared to 2018 levels. In addition, the company expects revenue to continue growing in 2019 with the number expected to be up by more than 30% compared to 2017 levels between $235 million and $245 million.
“If you look at trends, we’re starting to routinely breakeven. You look into 2019, we expect that to be routinely positive and those trends to continue to be positive have never been more optimistic about the possibilities,” said CEO Andy Marsh.
Expanding Business Empire
The management remains optimistic that EBITDA will breakeven in 2019 and turn positive starting Q3. To achieve the significant milestone the company has already started expanding its footprint into on-road delivery vehicles. The company is also eyeing sales opportunities in the telecom industry for its products in addition to targeting opportunities around autonomous vehicles.
In China, the company is eyeing strategic partnerships that will allow it to target a broader target market thereby accelerate sales. In the U.S, the company has already inked a deal with FedEx through which it hopes to integrate its technology into vans for delivering packages.
In addition, Plug is planning to establish relationships with global partners as it looks to strengthen its sales channels.
What Next For Plug Power
Plug Power has posted negative operating income over the past few years. While the trend did persist in 2018, the company looks set to turn the tide. Robust revenue growth is one of the developments that support talk that the company will turn in a profit in 2019.
2019 could turn out to be an inflection year on the company, on next-generation fuel cell stacks delivering improved operating specifications. If that was to happen, the company should be able to register improved sales leading to positive EBITDA; capable of shoring the stock’s sentiments in the market.
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Disclosure: We have no position in PLUG and have not been compensated for this article.