Piper Sandler Maintains Underweight Rating on Plug Power Following $200M Equity Offering, Shares Down 13%

Piper Sandler analysts reaffirmed an Underweight rating and a $2.50 price target on Plug Power (NASDAQ:PLUG) after the company announced a $200 million equity offering to fund its operations, which raised questions about the choice of equity offering over the existing at-the-market (ATM) program, as well as concerns about cash burn. As a result, shares dropped more than 13% pre-market today.

Adjusting for the beginning cash from the ATM used between March 31 and May 9, the total cash burn was calculated at a minimum of $295 million, with unrestricted cash burn at least $255 million. It remains unclear how much additional cash Plug Power drew from the ATM between May 9 and June 30.

Plug Power also disclosed that it deployed over $200 million worth of products and services during the second quarter, though actual revenues are expected to be lower due to accounting rules. The company is undertaking workforce reductions and raising prices to improve margins for the second quarter of 2024. Additionally, Plug Power plans to monetize certain credits to generate liquidity.

The analysts indicated that further details on the strategic rationale behind the equity offering, as opposed to utilizing the ATM, and the potential forward margin trajectory would be sought during the upcoming earnings report.