Every now and then, a parabolic move take a big dip. That is the case today with Plug Power stock, currently down about 10% as of this writing. Are you feeling the pain? Or did you miss the ride up and are curious if it is a good time to buy the dip? Either way, you are in luck. Today, we will be exploring the news behind today’s plunge and whether or not you should buy the dip on PLUG Power stock!
Today, investors are greeted with some heavy losses on Plug Power. But what actually caused this?
According to Yahoo Finance:
Plug Power said there were issues with the classification of certain costs that resulted in downsized research and development expenses and a corresponding increase in the cost of revenue.
Accounting errors are also observed in the “reported book value of right of use assets and related finance obligations,” “loss accruals for certain service contracts” and “the impairment of certain long-lived assets,” Plug Power noted.
Will they recover from this blunder?
Brief Technical Analysis
To really know the answer to that, just look at the chart. The chart will tell us if this is the end of the massive run on PLUG, or just an inconvenient setback.
Check out the daily chart below:
First, as you can see, this is one of the biggest pumps of the 2020+ bull market. And it is a monster.
I remember buying this stock at like $1 a few years ago, sold for a small gain and forgot about it. So, whether it goes up or down from here, just remember the moral of the story…don’t sell your stocks…
In any case…as of close on March 17, 2021, PLUG closed at $39.33, down a measly 7.85%. Current market cap is about $19 Billion.
However, the stock is down significantly from the all time high of ~$75 and has lost several of the major support levels (20, 50, 63 dma). This is not uncommon, considering basically all of the EV stocks took a major hit this month. We explain the reasoning for the drop in EV stocks and why we bought the dip in this recent NIO/TSLA article. (and yes, we bought the dip on TSLA and are up a lot).
Check out the daily chart, the price action is another giveaway:
PLUG started the day very weak today, plunging all the way down to $32.79. Only to rapidly recover and finish the day somewhat strong.
Generally when a stock recovers a significant portion, or even finishes positive after a heavy dump, it is considered bullish. Plug recovered about 50% of the losses on the day, so it is still a good sign of investor interest.
We will be monitoring this one closely, so make sure you subscribe for future articles!
Plug Power Stock Prediction
And now for the PLUG POWER STOCK prediction! What is to come of this EV titan?
Let’s be real…investors are OBSESSED with EV stocks. This can be evidenced by the unbelievable (not hyperbole) gains made in the past 12 months on EV stocks. Just look up TSLA, NIO, BLNK, QS, etc.
EV is the future, there is no doubt. Although PLUG is not technically an EV stock, it is clearly involved in the next generation fuel industry. Which essentially makes it part of the pack.
As a result, they all move in tandem. Just look at all the charts.
So is it time to buy the dip?
To be honest, if you have not gotten any of the stock and want to join the next generation of fuel cells, EV, etc. this is not a bad spot to buy the dip.
According to the daily chart, there is still a good chance this may go lower to about $25. If you are a long term investor, and do not mind taking that level of pain, then this is your spot to enter. You can always average down. Or just wait until the 20, 50 and 63 day moving averages are regained to push the stock back into its uptrend.
Overall, our Year End price target is back to all time highs of ~$75. Be patient and you will be rewarded, assuming the latest plunge is a fluke and the accounting errors are not as bad as they appear.
At parabolically, we are expert traders, so you will very rarely here any bearishness around here. (We did the call the huge dip recently though, right on schedule).
Remember, big money is made on buying the dip, not shorting or focusing on negativity like the bears.
Be realistic, this is a growing company, and demand for “green” fuels will continue to grow. We are still in the very early stages. Many companies will go under, but the winners will continue to win. Big.
For example, just look at the company’s Q4 Investor Summary:
From this release, you can tell the company is growing (record numbers) and expanding operations. Always a great sign for long term investors.
We recommend you do more due diligence on the company in general. Especially if you are looking to enter here.
Just make sure you understand, this is a highly speculative play. The company is growing, but it may take a while to catch up with the current valuation.
Conclusively, we believe this stock has a lot of potential and do not read too much into the daily movements. Excluding a black swan event in the markets or the “accounting errors” to be excessive, this stock is clearly a winner in a strong uptrend.
Continue monitoring the news for updates on this error and be vigilant. But, if it turns out to be a nothing burger, then you bought the dip when others were fearful and will be rewarded.
Make sure you subscribe to keep up with news on PLUG Power, EV stocks, cryptocurrencies and SPACs!
What do you think? Fraud or big dip buying opportunity?
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