Plug's Deal With Amazon Powers Rate

Plug Power (NASDAQ: PLUG) develops fuel cells for electric lift trucks and materials handling equipment. The company went public in 1999 at $15, rising to $1,200 in 2000 and cratering to under $100 in 2001. The share price meandered to 80 cents by February of 2017, but shot up to a $2-handle this week after reporting that Amazon will utilize Plug’s hydrogen-powered forklifts. Amazon also acquired rights to buy a stake in the company. PLUG’s revenue in FY 2016 was $85 Million, with FY 2017 revenue being estimated at $150 Million. The company has not had a profitable year since its IPO.

PLUG is becoming more popular among short sellers, with the Short Interest as percentage of float rising from 6% in 2012 to 35% in 2014, settling at 19% currently. With a market capitalization of $400 million, shares are very tough to find. It seems like most Securities Lending desks are looking for PLUG: large banks, trading firms and retail brokers. Daily inventory shows are unstable as traders cover or short more with utilization nearing 100% most days. The borrow fee rose from 10% to 80% within the last two months. Borrow Fees many times track volatility, so it’s no surprise that the fee jumped with 10-day vol spiking from 75 to 300 this week. ATM May options are trading at over 100% Implied Volatility, suggesting that the borrow cost may continue to be relatively high for some time.

 

 

Disclosure: The analysis in this article is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To ...

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