Following months of doubt about its solvency, Plug Power Inc. (NASDAQ:PLUG) has purchased itself some breathing room — and, maybe, bought hydrogen ETFs a second lease on life.
The stock leaped this week when the company said it agreed to issue a $370 million warrant inducement deal, alleviating near-term funding worries that had been pinching the stock and sector.
Under the deal, an institutional investor exercised outstanding warrants at $2 per share and was issued new ones at $7.75, a model that could raise an additional $1.4 billion if all the warrants are exercised. That’s a big “if,” enough to change sentiment.
Also Read: Plug Power’s Sizzling Stock Rally Lights Up These 2 Clean-Energy ETFs
Susquehanna’s Biju Perincheril almost doubled his price target on Plug to $3.50, reflecting cautious optimism that the hydrogen pioneer can get operations under control under new CEO Jose Luis Crespo. This gave a fresh push to the stock, pulling up related ETFs as well.
Hydrogen ETFs Struggle To Shake Off The Chill
The Plug Power bounce has drawn renewed attention to hydrogen-themed ETFs, most of which had been recovering from deep losses amid tightening monetary conditions and growing project delays. The Global X Hydrogen ETF (NASDAQ:HYDR), one of the few remaining hydrogen-focused funds after its rivals, HDRO and HJEN, suspended operations, gained more than 8% over the past five days.
Contrastingly, more diversified clean-energy counterparts, iShares Global Clean Energy ETF (NASDAQ:ICLN) and First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN), though underperforming HYDR year-to-date as well as the past five days, have proved relatively resilient this year, fueled by solar and battery holdings that cushioned hydrogen’s volatility. The disparity raises a nagging question: will hydrogen ETFs break free from Plug’s theater and become more diversified, long-haul plays?
Testing The Sector’s Staying Power
Hydrogen’s potential, that includes driving trucks, running factories, and whole grids, has long been ahead of its profitability. For ETF investors, Plug’s recent action is not so much about near-term upside but about survival. If the company can make it through without further dilution, funds such as HYDR might eventually end their volatile streak.
Until recently, the industry has been speculative. But in a world that punishes idealism, a working balance sheet could be the most revolutionary innovation of them all.
Read next:
Image: Shutterstock
- No comments yet. Be the first to comment!