Why Has Plug Power’s (NASDAQ: PLUG) Stock Fallen 21% In A Week?

Plug Power's stock (NASDAQ: PLUG) has fallen 21% in the last 5 trading days, effectively wiping out gains from earlier this month.

With the pullback accounted for, short term holders of PLUG may be sitting on gains of 3% over 1 month, but anyone who has been a longer term holder will likely be firmly red. The stock is down almost 80% over the last 12 months of trading, and a shift in sentiment is clearly needed. But what has caused the recent downturn after what was seeming to be a strong July?

The company issued a significant stock offering, leading to a noticeable swelling of the float, and a dilution for existing holders. The energy company, which specialises in alternate energy technology including hydrogen fuel cell systems, declared its intention to sell approximately 79 million shares to the public at a price of $2.54 each. This move is expected to bring in gross proceeds of around $200 million.

The public offering was scheduled to close on July 22. Furthermore, underwriters are given an option to buy up an additional 11.8 million shares within a 30-day period if they wish to expand their holdings. Such over-allotment options are common in public offerings and provide underwriters with flexibility to cover over-subscriptions.

The company has outlined that the proceeds of the share offering will be allocated for general corporate purposes. This broad description typically encompasses a range of activities such as funding ongoing operations, investing in projects, repaying debt, or other operational needs that contribute to the company's growth and expansion strategies.

This financial maneuver follows on the heels of a substantial conditional loan guarantee that Plug Power secured from the U.S. government, to the tune of up to $1.66 billion, intended for the development of green hydrogen production facilities. This environmental initiative aims to bolster the company's capabilities in providing cleaner energy solutions. However, it is unclear how much of the new capital from the stock offering will be directed towards this project.

Investors and market analysts will be monitoring the outcome of this stock offering closely. The success of the offering, along with the deployment of the raised funds, could prove pivotal for Plug Power, particularly during a time when the company looks to reinforce its market position in the renewable energy sector amidst a challenging economic climate.