Why Plug Power Stock Plunged on Friday After an Early Week Rally

Plug Power (NASDAQ: PLUG) stock surged by as much as 15.3% at its highest point in trading this week before reversing course on Thursday. And on Friday morning, shares of the hydrogen and fuel cell maker crashed by more than 8% and were trading 3.5% lower for the week through 11 a.m. ET, according to data provided by S&P Global Market Intelligence.

Plug Power announced a new strategy this week that could bring in some cash, but a fresh development in another part of the clean energy industry dampened investor sentiment and sent the hydrogen stock tumbling again.

Why Plug Power stock rose previously

This week, Plug Power announced it was initiating a new equipment leasing platform that could help it raise $150 million in the mid-to-near term. To start, it signed three sale and leaseback transactions worth $44 million with GTL Leasing, a lessor of hydrogen storage and transport equipment. Private equity firm Antin Infrastructure Partners owns a majority stake in GTL.

Under such transactions, Plug Power can receive lump sum payments for equipment such as trailers and storage tanks while retaining the right to use them, giving it rapid access to funds it can use to cover its day-to-day operational expenses.

Plug Power stock could remain volatile

Plug Power is facing an ongoing cash crunch amid dwindling sales and mounting losses, and even issued a going concern warning last year. Its new leasing platform could allow it to raise some cash while it tries to secure bigger funding, such as a loan from the Department of Energy. Plug Power has a conditional loan guarantee of up to $1.66 billion, and says it is working closely with the department to finalize the loan.

This week, Plug Power also secured an order for 25 megawatts of electrolyzers from Castellon Green Hydrogen, a joint venture between energy giant BP and Spain-based utility operator Iberdrola. While this order signals a growing interest in green hydrogen, other clean energy sources are getting even more attention.

On Friday, utility giant Constellation Energy announced plans to restart a shuttered nuclear reactor in Pennsylvania after signing a big contract to provide carbon-free electricity to tech giant Microsoft's data centers. The deal could be a harbinger of more opportunities to come for nuclear power, which is cheaper to produce, making it even harder for companies like Plug Power to make a compelling case for alternatives such as green hydrogen.

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