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Shares of Plug Power (PLUG) are sliding on Friday morning after the company announced a $200 million common stock offering. The company claims the offering is for "general corporate purposes."
Morning Brief anchors Brad Smith and Seana Smith break down the latest development for the hydrogen fuel cell developer and what it could mean for the company moving forward.
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This post was written by Nicholas Jacobino
Another name that we're tracking here this morning, Plug Power. That is sinking. It's down by about 13 and a half percent after saying it's begun a $200 million stock offering. Now this comes as questions arise around the state of the company's finances. This is a liquidity play. However, you're seeing it also be an impact to the shares because typically when there is an additional offering like this, it is a delusive or dilutive event to existing shares that are in the market. So a typical reaction, but there have long been questions around some of the capital position for this company to continue operating as it has been trying to scale up as well.
Yeah, exactly. Taking a look at the quick analyst reaction to this news, Keybank saying that the equity issuance is likely to lead to further weakness that we're seeing in shares as liquidity becomes more and more of a concern. Piper Sandler saying that they expect to see questions about the rationale of an offering in lieu of the existing cash burn here that they are seeing. They also went off to say that it's unclear how much cash plug drew from the existing here between beginning of May and end of June. So again, analysts having some questions on this news, but like you were saying Brad, not necessarily surprised to see the shares are reacting the way they are today.