This article first appeared on Simply Wall St News.
While it is evident that the world is heading toward replacing internal combustion, the war for its successor is raging on. One of the aspiring candidates is the hydrogen fuel cell system, developed by the companies such as Plug Power Inc. (NASDAQ: PLUG)
After soaring as high as US$75 earlier this year, the stock retraced to US$20, showing the ugly side of emerging technology volatility. Yet, the latest optimism seems to be turning the tide.
Optimism Before Investor’s Day
Plug Power just announced a strategic partnership with Airbus. The companies are joining forces to explore the future of green hydrogen use in the aerospace industry. One of the U.S. airports will be the first “hydrogen hub ” base before expanding the infrastructure.
Furthermore, CEO Andy Marsh announced that the vehicle they developed in partnership with Renault would be presented on the annual investor’s day, on October 14th.
Unsurprisingly, hikes are on the menu as Morgan Stanly upgraded PLUG to Overweight from Equal Weight, moving the price target from US$35 to US$40. However, investor’s day will be an actual test for the company, as analysts speculate on potential upgrades to guidance and medium-term targets.
Ownership in Numbers
Plug Power is a pretty big company. It has a market capitalization of US$17b. Normally institutions would own a significant portion of a company this size. Our analysis of the company’s ownership, below shows that institutions own shares in the company.
What Does The Institutional Ownership Tell Us About Plug Power?
Plug Power already has institutions on the share registry. This can indicate that the company has a certain degree of credibility in the investment community.
However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They, too, get it wrong sometimes. When multiple institutions own a stock, there’s always a risk of being in a ‘crowded trade’.
When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Plug Power’s historical earnings and revenue below, but keep in mind there’s always more to the story.
Our data shows that the largest shareholder is Grove Energy Capital LLC, with 9.6% of shares outstanding. With 8.5% and 7.8% of the shares outstanding, respectively, The Vanguard Group, Inc. and BlackRock, Inc. are the second and third largest shareholders.
Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely disseminated, and there is no dominant shareholder.
While studying institutional ownership for a company can add value to your research, it is also an excellent practice to research analyst recommendations to understand a stock’s expected performance better. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Plug Power
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions, too much power is concentrated within this group.
Our information suggests that Plug Power Inc. insiders own under 1% of the company. However, we do note that it is possible insiders have an indirect interest through a private company or other corporate structure. Being so large, we would not expect insiders to own a large proportion of the stock.
Collectively, they own US$105m of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public holds a 40% stake in Plug Power. While this size of ownership may not be enough to sway a policy decision in their favor, they can still make a collective impact on company policies.
Private Company Ownership
We can see that Private Companies own 9.6% of the shares on issue. It’s hard to draw any conclusions from this fact alone, so it is worth looking into who owns those private companies. Sometimes insiders or other related parties are interested in shares in a public company through a separate private company.
It is interesting to see that the public owns as much of the shares as institutions. Yet, this has both positive and negative implications. On the one hand, it can mean that there is much space left for growth, but on the other, it can create those tense situations with extreme volatility.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
Case in point: We’ve spotted 2 warning signs for Plug Power you should be aware of, and 1 of them is a bit concerning.
Additionally, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12 months ending on the last date of the month the financial statement is dated. This may not be consistent with full-year annual report figures.
Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.