Because Plug Power Stock jumped 10% Tuesday morning

Plug Power (NASDAQ: PLUG) The stock jumped more than 10% in early trading on Tuesday, hitting $3 a share before giving back most of its gains and retreating to a single-digit gain. As of 10:20 am ET, Plug stock is still up, but only by 2%.

So why did Plug Power do it go up in the first placeand why did he give up his gains so quickly?

In a note out this morning, investment bank Morgan Stanley Plug Power is expected to receive Department of Energy approval for a $1.7 billion loan by the end of this week, as StreetInsider.com recently reported. As the analyst explained, the Biden administration is likely to approve this loan before the inauguration of President Trump to “reduce the risk of a potential repayment of this loan”.

Assuming Morgan Stanley is right about this, Plug Power is about to get a big bump in its share price once the loan approval becomes official.

So you should buy Plug Power stock, right? Well, not so fast.

Loan approval will be good news if it happens, no doubt. But Morgan Stanley still doesn’t think the stock is a “buy,” and in fact has reiterated its “underweight” (that is, “sell”) rating on Plug stock, and is sticking with a $1.75 -per-share. target price on the actions.

And why did MS do this? Because according to the banker, even $1.7 billion in government money will not be enough to save Plug Power. Remember that the company burned $1.8 billion in cash in 2023. It continued to burn cash through 2024 – about $892 million in the first three quarters, which implies about $1.2 billion in negative free cash flow for all of 2024.

With less than $100 million in cash remaining, and more than $900 million in debt already accrued, Morgan Stanley thinks Plug Power will need to raise at least $500 million more in cash this year, through the sale of new stock.

Loan or no loan, Plug Power stock remains a sell.

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