Traders overreact to political wrangling
I’m bullish on Plug Power (PLUG) Inventory. If you truly believe in the future of clean energy, not just in the United States but internationally, now is the perfect time to consider a long position in Plug Power stock. Sure, there will be speed bumps along the way, but the sustainability movement is here to stay.
Plug Power manufactures hydrogen fuel cells. There are other companies that do this, but Plug Power is probably the most famous one that specializes in this area and whose shares are traded on a major US stock exchange. The market capitalization of the company is $9 billion, so it is not too small but also allows for rapid growth in the coming years.
As we’ll find out, Plug Power is expanding its market footprint in Europe, where the green energy movement is growing rapidly. Certainly, there are problems and blockages in the territory of Plug Power in the United States. Always remember, however, that politics can temporarily impede progress, but a powerful movement like clean energy cannot be held back forever.
Political tussle creates problems for power supply
There’s no denying that US President Joseph Biden has big ambitions for the sustainability movement in America. In particular, the Biden administration is seeking to reduce US carbon dioxide emissions by about 50% by the end of the 2020s. That’s easier said than done, however, as political opponents of the president in Congress are bound to back down.
One would assume that this pushback would come from Republicans in the Senate and House of Representatives. Surprisingly, however, there was resistance from a West Virginia Democrat, Senator Joseph Manchin. As Biden and other Democrats seek to pass a broad spending package that includes clean energy initiatives, Manchin’s objections threaten to derail the White House’s grand plans.
Why would Manchin oppose green energy spending? Apparently, the senator is in no mood to increase government spending right now, especially following a scorching CPI print. To quote Manchin spokesman Sam Runyon, “Political headlines are meaningless to millions of Americans struggling to afford groceries and gas as inflation soars to 9.1% “.
Since Democrats only have a 50-50 majority in the Senate, Manchin’s vote is crucial. Without his support, Biden’s hopes for new federal spending on climate change are on hold, at least for now. In addition, the congressional elections are approaching in November and the Democrats could lose some seats in the Senate. In other words, the clock is ticking.
Upon news that Manchin does not currently support the White House’s sustainability spending proposal, traders dumped their shares of Plug Power. It was a real bloodbath as Plug Power stock fell almost 13% on Friday, falling below $16.
Climate change legislation could still be passed
Apparently, investors have made the connection between Plug Power’s business model, as the company builds hydrogen fuel cells primarily for electric vehicles, and the delay in additional federal spending on clean energy. Did Wall Street traders overreact to the news?
The overall risk can sometimes make you nervous, but it can also present great buying opportunities when traders panic sell. Here’s a detail from the story that Plug Power investors might have missed. Apparently, Runyon said “Senator Manchin didn’t walk away from the table.” Therefore, the senator is apparently open to further discussions about passing new clean energy legislation.
Just consider how quick the relief rally could be if this legislation is passed. Keep in mind that politics is a slow process with lots of conflict. Posturing and bickering are normal and to be expected. The fact that traders sold shares of Plug Power below $16 shows how sensitive they can be to stocks, but they may end up regretting their knee-jerk reaction.
After all, Plug Power’s future revenue won’t come entirely from the United States. For example, the company is partnering with MOL Group to build a massive green hydrogen production facility in Hungary. In addition, Plug Power was recently commissioned by the hydrogen company H2 Energy Europe to deliver a one gigawatt electrolyser to Denmark. In addition to all this, Plug Power plans to build a 35 tonnes per day green hydrogen production plant in the Belgian port of Antwerp-Bruges.
The Taking of Wall Street
According to TipRanks analyst rating consensus, PLUG is a strong buy, based on 11 buy ratings and three hold ratings. Plug Power’s average price target is $33.54, implying an upside potential of 117%.
Plug Power Stock Could Recover From Drop
Of course, it was scary to see Plug Power stock plunge headfirst on Friday. However, Plug Power’s revenue will not only come from its US operations. The company also has a strong presence in Europe, where sustainability is a top priority.
Meanwhile, there has been a delay in White House plans for new federal spending on clean energy. However, that is not necessarily the end of the story. If the political roadblocks are lifted ahead of the November election, Plug Power shares could rally to new highs.
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