As Q2 Report Released, PLUG Power Set For Nice Short Squeeze Play

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By Joseph Carducci on August 14, 2014 Energy & Solar

Plug Power (NASDAQ:PLUG) is due to report earnings later today and there is a lot of excitement from investors who think this might be the start of a strong short squeeze play. The stock price has been trending up over the last few months even as the short interest has risen to new highs. In either case, this second quarter earnings report should be significant since it comes at a key point.

Some investors still have questions and concerns about the technology behind the fuel cell systems PLUG designs, builds and manufactures for electric lift trucks. While a number of markets have been considering the idea of moving to cleaner energy, it still remains to be seen whether fuel cell manufacturers have the potential to revolutionize industry. Then again, we have recently seen a number of big players become interested in this sector, like General Electric (NYSE:GE), so the potential does seem to be upon us…but can PLUG capitalize on this?

Here’s what to watch for in the Q2 report:
Revenue Growth:

The company is fairly positive regarding this area. Even the analysts are predicting a 123.2% rise from the second quarter of 2013, to $16.7 million. Additionally, PLUG is looking to ship more units to some big players in the retail and grocery sectors, including 650 units to Wal-Mart (NYSE:WMT), Proctor & Gamble (NYSE:PG), and Volkswagen (OTCQX:VLKAY). Beating these analyst estimates, which certainly does seem very possible, would be a great start to the remainder of 2014.

The strong reported growth of Ballard Power (NASDAQ:BLDP) is also a great case for continued strength and positive earnings of PLUG. The 209% revenue growth reported by Ballard is largely due to the growing number of fuel stack orders placed with them by PLUG Power. This also bodes well for a decent increase in services revenue. The one thing that could potentially depress revenue growth is if the company decides to shift some of their orders into the 3^rd and/or 4^th quarters.
Backlog & Bookings:

PLUG Power has also been doing a positive job in the areas of both backlog and bookings. As of mid-April their year-to-date backlog had increased by 1,439 units. This put current backlog at a total of 3,719 units, which is nearly three times the level from last year.

It also seems likely that this backlog will increase, due to the company closing eight GenKey deals back in the first quarter. They also achieved an extension in their deal with Wal-Mart, which should help to further boost these levels. Bookings also reached the $80 million level at the end of the first quarter.

The first quarter conference call also spoke very positively about future bookings. In fact, management has said they see about two-thirds of their targeted yearly $150 million in bookings coming by the end of the second quarter. With these numbers, that means that anything less than $100 million would be quite unexpected.
Bottom Line:

It certainly seems as if PLUG Power is in an excellent position to start a short squeeze. Today’s earnings report should be the key to this. Given the facts regarding revenue growth, backlog, and bookings, this could be the time to position yourself for the growth of this exciting new energy technology.