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Plug nosedives on $1 billion
equity offering
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The company has an established
record of stock dilution
Plug Nosedives
Hydrogen and Fuel-cell producer Plug, or
the notorious company with a serious track record of selling stock, does it again.
On Wednesday, the company announced a $1
billion capital raise through an at-the-market (ATM) offering; unsurprisingly,
this caused the stock to tank 17% in after-hours trading.
The company announced in its recent SEC
prospectus that it’s teaming up with B. Riley Securities. They plan to sell
stocks worth up to $1 billion, which isn’t a one-time event. Sales will happen
periodically, with B. Riley taking the lead as the sales agent.
Of course, this stock has been a mess for a
while. It is down over 80% in the past 12 months and around -40 % since the
start of the year.
Look at the incredible cash-burning rate at
which the company is operating.

Source: ycharts, macrotrends
Losses are piling up, and PLUG’s operating
cash flow is increasingly negative. This has caused the company’s cash and cash
equivalents to shrink constantly over the last several quarters and are in
danger of going negative if the trend continues.
Management uses the company stock to fund
the endless cash hole. In a sense, the product seems to be the stock.
Fundraising issues are not new. The fuel
cell company had announced a “going concern” issue in November of last year,
meaning it will not have the cash to fund the business.
Serious dilution track record
Plug faces hard times. A testament to the
many reverse splits the company has undergone to remain listed on the Nasdaq is
that its price was once north of $1500 split-adjusted during the dot-com
bubble, compared to the current price just below $3.
Equity offerings via ATM or other equity
mechanisms, followed by reverse splits to keep PLUG’s share price above $1 and
fund its operating business, is nothing new. The company often uses that
mechanism to stay afloat, diluting shareholders in the process.
The company is authorized to issue 1.5
billion shares, with the current number being 625m; hence, there is a long way
to go regarding future equity offerings.
Investors can long Plug using our 1x Plug Power.
Alternatively, investors can short Plug
using our -1x Plug
Power.