Plug Power (NASDAQ: PLUG) stock plummeted Thursday morning, with Citi advising investors to steer clear.
Investors riding the wave of the recent surge in solar energy stocks have received a word of caution from Citi, with the financial giant advising against positions in SunPower (NASDAQ: SPWR) and Plug Power (NASDAQ: PLUG).
Citi’s analysis points to several factors propelling the rally, including a broader investor fascination with renewable energy. The firm sees this interest as a strategic investment linked to burgeoning themes such as data centers and artificial intelligence, with companies like Microsoft (NASDAQ: MSFT) pledging to power their data centers entirely with renewable energy by 2025.
Factors Behind the Solar Energy Rally
Citi believes that short squeezes, attention pivoting to renewable sources amid rising natural gas prices, and recent clarifications from the Treasury Department emphasizing the domestic renewable energy value chain, especially cell manufacturing, might also fuel the surge in solar stocks.
Moreover, an industry forum convened by the China Photovoltaic Industry Association (CPIA) discussed potential regulatory measures to rein in excessive production capacity expansion and mitigate price competition.
Citi’s Skepticism and Recommendations
However, amidst the optimism, Citi remains skeptical, maintaining a Sell rating on SunPower and Plug Power. The firm’s analysis suggests that the current rally might not be sustainable for these companies and advises investors to avoid these stocks in the present market conditions.
The warning from Citi comes amid a broader market trend favoring renewable energy stocks, driven by increasing investor emphasis on sustainability and the global shift towards cleaner energy sources. However, the firm’s specific reservations about SunPower and Plug Power highlight that not all companies in the sector may benefit equally from these trends.
Plug Power (NASDAQ: PLUG) Stock Reaction
As of 10:02 a.m. (Eastern Time) Thursday, PLUG stock traded at $3.25, marking a 4.69% decrease compared to the previous trading session.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
