Plug Power Inc (NASDAQ: PLUG) is screaming for the top in the market this morning, following up on the strong gains seen yesterday. The gains yesterday had to do with a $1.5 billion strategic investment into the company. Today, the move is political.
Here’s what’s going on:
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- SK Group Makes a $1.5 Billion Investment in PLUG
- Management Commentary
- Political Climate Change Leads to More Gains
- What Analysts Think About PLUG Stock
- Risks to Consider Before Buying PLUG Stock
- Final Thoughts
SK Group Makes a $1.5 Billion Investment in PLUG
As mentioned above, Plug Power had a great day in the market yesterday after it was announced that the company would be receiving a strategic investment of $1.5 billion.
In the press release, PLUG said that the investment will be coming from SK Group in order to form a joint venture company in South Korea. The goal is to bring the company’s technology to asian markets.
The investment represents a stake of about 10% in Plug Power by SK Group.
In a statement, Andy Marsh, CEO at PLUG, had the following to offer:
SK Group has an established strategy for building out the hydrogen economy in South Korea and beyond. The current relationship with SK Group offers immediate strategic benefits to Plug Power to accelerate its expansion into Asian markets – and is intended to result in a formal joint venture (JV) by 2022. Due to the complementary strengths in this partnership, we expect rapid growth and significant revenue generation from the joint venture that are incremental to our 2024 plan.
The above statement was followed up by Hyeongwook Choo, Head of Hydrogen Business Development Center of SK Holdings and President & CEO of SK E&S, a leading clean energy company, had the following to offer:
Plug Power is a leading player in the hydrogen industry with decades of experience and distinguished business model. This partnership between Plug Power and SK will bring significant and solid opportunities in the hydrogen industry, creating value to society. SK Group is focusing and actively investing into the ESG sector and Plug Power would be one of our splendid footprints within this strategy.
Political Climate Change Leads to More Gains
While the investment from SK Holdings is great news, it’s not the only driver of the movement we’re seeing today. PLUG stock is getting propped up from a political climate change in the United States.
We all know that Joe Biden will be our next President and that the democrats control Congress. Yesterday, in the Georgia runoffs, democrats also took the Senate.
So, what’s the big deal?
Plug Power is a clean energy company, and democrats are all about clean energy. In fact, over the past several years, Joe Biden has made his position with regard to the energy industry clear. In office, he’s likely to make plenty of changes, which will easily make it through Congress and Senate with the democrat majority.
These changes are likely to include research grants for companies in the clean energy space. Also, we’re likely to see tax cuts. Both of these will have a positive impact on PLUG stock.
Furthermore, we’re likely to see tax perks for those that invest in clean energy solutions, meaning that the company’s customers will likely enjoy tax cuts, leading to increasing demand. All in all, there couldn’t be a better political climate for PLUG stock.
What Analysts Think About PLUG Stock
According to TipRanks, analysts absolutely love Plug Power. In fact, nine analysts cover the stock, all of which rate it a Buy. That’s right, there are no sell or hold ratings.
At the moment, price targets range from $21 to $60 per share, with a median of $36.11. While many of these price targets suggest declines ahead, the vast majority of them are outdated and will likely be revised upward considering recent company specific and political news.
Risks to Consider Before Buying PLUG Stock
No matter what you invest in, you’re going to need to be willing to accept risk. All investments come with them. When it comes to PLUG, the most significant risks to consider include:
- PLUG Doesn’t Make Money. Sure, Plug Power generates plenty of revenue, but it is spending far more than it brings in. That creates a bit of a problem. If the company can’t survive with the money it has in the bank, it will likely raise funds through the sale of newly-issued shares, leading to dilution.
- Speculation. A bet on PLUG stock is a bet that we’re going to see a clean energy revolution in the years ahead. While there’s a very strong chance this will be the case, there is no guarantee, making an investment in the stock a speculative bet.
The bottom line here is simple. Sure, an investment in PLUG stock will come with risks, all investments do, but there has never been a better time to invest.
With the recent political climate change and agreement that will drive a $1.5 billion investment, there has never been a better time to invest in Plug Power. Ultimately, I’m expecting the company to become a cornerstone in the clean energy revolution, setting the stage for tremendous growth in PLUG stock ahead.