The Bearish Case for Plug Power (PLUG)

A descending triangle pattern has formed in the chart of Plug Power Inc. (PLUG).  This is a bearish pattern and if the support level is broken, a breakdown is expected…

Plug Power Inc. (PLUG) is an innovator of modern hydrogen and fuel cell technology. It has revolutionized the material handling industry with its full-service GenKey solution, which is designed to increase productivity, lower operating costs and reduce carbon footprints in a reliable and cost-effective way.

PLUG had a strong 2020 due to interest in alternative energy stocks, but has faltered this year from a rotation out of growth stocks. Plus, the company has been asked to restate financial statements for the last four years, which is not a good sign.

The company does have strong fundamentals though with a healthy balance sheet. PLUG’s current ratio is a high 3.0, which means it has more than enough liquidity to handle short-term obligations.

Its growth outlook is also high, with analysts forecasting sales up 39.10% this year and earnings rising 85.40% over the same period. With those figures, the stock is also overvalued with a price-to-sales ratio of 37.5. While the stock is up year to date, it has shown bearish momentum over the past month.

Take a look at the 1-year chart of PLUG below with my added notations…

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