Short interest in Plug Power Inc (NASDAQ:PLUG) has swelled from 7 million to 35 million this year. And trading volume has declined from 31 million on April 30 to 16.1 million on May 30. That’s a welcome sign after immense volatility in the first few months of this year, says ONeil Trader of Seeking Alpha. The decline in trading volume is driven by a lack of new catalysts.

Plug Power

Short interest in Plug Power has ballooned to 23.2% of the float

The Seeking Alpha contributor says that it will remain the case for the next two months as investors wait for the Q2 results, unless Plug Power Inc (NASDAQ:PLUG) makes some big announcement in the meantime. The fuel cell company is expected to report its second quarter results in mid-August. In the meantime, the stock could witness a massive short squeeze. Short interest has ballooned to 23.2% of the float. And falling daily trading volume may add to intensified short covering because it would take more trading days to cover the short positions.

Hyundai Motor Co (KRX:005380) launched its first hydrogen fuel cell-powered SUV in California last week. That’s a positive development for the fuel cell industry. The Hyundai Tucson offers a 265-mile driving range and compared favorably to plug-in electric cars. Tucson can be refueled in just 10 minutes. California currently has 9 hydrogen filling stations, and another 48 are under development. The development of hydrogen infrastructure bodes well for Plug Power Inc (NASDAQ:PLUG) and other fuel cell companies.

Q2 result most important near-term catalyst for Plug Power

Plug Power Inc (NASDAQ:PLUG)’s second quarter result is the most important near-term catalyst. Analysts expect the Latham, New York-based company’s revenues to surge 126% YoY to $16.95 million. Investors will also be looking for full year guidance and backlog updates, as they will indicate whether Plug Power can sustain its growth going forward. ONeil Trader expects the company’s revenues to keep growing at triple digit rate.

Plug Power Inc (NASDAQ:PLUG) expects to announce a major deal by the end of the third quarter, which could provide additional revenue upside. But before that Q2 report will be very important because the company management has a history of providing higher guidance and delivering below expectations. Now Plug Power will have to show that its practices have changed.

Plug Power Inc (NASDAQ:PLUG) shares inched up 0.23% to $4.30 in pre-market trading Wednesday.