What Happened?
Shares of fuel cell technology Plug Power (NASDAQ:PLUG) fell 25% in the morning session after renewable energy stocks declined as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election.
For clean or renewable energy stocks, President-elect Trump is considered a headwind to their businesses. Specifically, his administration could lead to an overhaul of recent industry progress, including a repeal of President Biden’s Inflation Reduction Act. The IRA, as it's known, offers long-term tax credits for solar, wind, geothermal, and other renewable energy projects, often extending them for a decade. These tax credits offer stability and predictability, enabling companies to make long-term investment plans. For example, solar and wind energy developers benefit from a 30% investment tax credit (ITC), which can increase further if certain labor and domestic content standards are met.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Plug Power? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Plug Power’s shares are extremely volatile and have had 91 moves greater than 5% over the last year. But moves this big are rare even for Plug Power and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 16.6% on the news that the company announced that it had commenced an underwritten public offering of $200 million of its common stock. Notably, before the announcement, PLUG had more than 742m shares outstanding, which means the stock sale could raise the supply by roughly 10%. This could have a negative impact on its stock price as the increase in the supply of outstanding shares dilutes the ownership of existing shareholders.
Plug Power is down 57.2% since the beginning of the year, and at $1.97 per share, it is trading 68.6% below its 52-week high of $6.26 from November 2023. Investors who bought $1,000 worth of Plug Power’s shares 5 years ago would now be looking at an investment worth $689.47.
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