Plug into This Options Play Before Earnings Disappoint
Plug Power Inc. (NasdaqCM:PLUG) reports earnings this Thursday, May 20, 2021, after the bell. If the company disappoints on their numbers the stock could tumble.
Consensus estimates are for a loss of 8 cents per share, a year ago Plug lost 12 cents a share.
Speaking of losses, Plug Power isn’t expected to make a profit until 2024. There’s a chance, according to some analysts, it could make a penny per share in 2023. That’s pathetic in my book.
Not that losing money is always a bad thing, especially if the company is an up-and-coming biotech that could hit it out of the park. But Plug isn’t like that.
It’s in the hydrogen fuel cell biz, which sounds sexy in the new age of alternative fuels, but they’ve been around since 1997 losing money pathetically, and totally lacking sex appeal, in my opinion.
However, my opinion wasn’t shared by traders and investors last year. Plug, which had been trading (more like flatlining) for years, caught fire during the summer. Starting in June, the stock rose from the dead and skyrocketed from near $4.00 to an insane intraday high of $75.49 on January 26, 2021.
That’s spectacular and proof that alternative fuel narratives are powerful fuel in and of themselves.
Oh, but wait. The stock subsequently collapsed. Now it’s struggling to get back above $25.
Only a few days ago, on May 11, 2021, it got down to $18.47 intraday. It closed that day back up at $23.60, but the writing’s on the wall. If there are no bids the stock’s going to crumble.
If Plug’s earnings disappoint, the stock’s going right back down south of $20 and probably will break $18.
The way to play that prospect, if you think like I do, is to buy PLUG June 11, 2021 $20 strike price PUTS. Pay between 50 and 60 cents and you could end up making a tidy profit if PLUG drops to $18 by expiration.
I say Plug into that prospect and play PLUG to the downside.