Plug Power (PLUG) stock is suddenly on fire. The hydrogen technology company’s shares have jumped for eight straight sessions, up 55% during that stretch, leaving investors scratching their heads.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
On Friday morning, Plug traded as high as $2.30 before settling back to $2.18, up 3.6%. This is far stronger than the S&P 500 (SPX), which added just 0.25%, or the Dow (DJI), which gained 0.23%.
What’s Behind This Mystery Rally?
Unlike most surges, this one didn’t come with big analyst calls, new earnings, or game-changing partnerships. Wall Street’s average price target remains stuck around $2. No upgrades. No raised forecasts. Nothing.
Yet the stock keeps climbing. The most likely explanation is technical, not fundamental.
Perhaps It Could Be a Rate Cut Boost
One factor is the Federal Reserve. On Wednesday, Plug stock soared 19% after the Fed trimmed short-term interest rates by a quarter point, moving the target range to 4% to 4.25%.
This is important for Plug because it still burns cash and relies on external financing. Cheaper borrowing costs can buy time for a business that isn’t profitable yet. But a single rate cut doesn’t fully explain a 55% move in a week.
Could It Be a Short Squeeze?
Another explanation is short interest. About 40% of Plug’s tradable shares are sold short, according to FactSet (FDS). This compares with just 3% for the average S&P 500 stock.
When short interest is that high, rallies can feed on themselves. Traders betting against the stock are forced to buy back shares at higher prices to limit losses. This “short squeeze” pushes the stock even higher, pulling in new buyers along the way. It’s the kind of setup that can create eye-popping moves without much news at all.
Even after this run, Plug is up just 2.4% in the past year. The stock has swung like crazy over the past 12 months, from a low of 69 cents to a high of $3.32.
The big question is whether this surge is a real turn in sentiment or just a squeeze that will fade once the shorts catch their breath. Either way, Plug Power’s chart is doing something very few expected this September.
Is Plug Power a Good Stock to Buy?
Wall Street is approaching PLUG with tons of caution. With 9 Holds – to go along with 4 Buys and 2 Sells – PLUG carries a consensus Hold (i.e. Neutral) rating. The 12-month average PLUG price target of $1.89 suggests losses approaching 13% in the year ahead.
