Plug Power Inc (NASDAQ:PLUG) has become a favorite of day traders. But shares of the fuel cell maker plunged as much as 11%, triggering the short-sale circuit breaker. The restriction is aimed at smoothing out volatility in a stock. Today, the stock has gained 3.86% to $6.19 in pre-market trading. The stock had witnessed a 3% fall on Monday and a 16% decline on Friday (March 14).
Plug Power has been extremely volatile this year
Nasdaq, where Plug Power Inc (NASDAQ:PLUG) is listed, alerted traders at At 1:45 p.m. ET on Tuesday that shares of the Latham, New York-based company have tripped a circuit breaker. The SEC regulation takes effect when a stock drops more than 10% from the previous day’s closing price. The rule remains effective through the close of current trading day, says Steven Russolillo of The Wall Street Journal. The rule prevents short-sellers from bringing down an already-beaten down stock further. It prevents abusive and manipulative short-selling.
Plug Power Inc (NASDAQ:PLUG) shares have been extremely volatile this year. Last week, the stock surged about 25% after the company’s fourth quarter revenues beat estimates. Plug Power reported revenue of $8 million, compared to $5.9 million in the corresponding quarter last year. The company posted a net loss of 8 cents a share, in line with the consensus. Before that rally, the stock had plummeted 42% after Citron Research questioned the company’s fundamentals. The research firm said Plug Power is a “casino stock” on Wall Street.
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Is Plug Power really the next energy breakthrough?
Volatility in the stock has been mainly due to sharp disagreement among investors about Plug Power Inc (NASDAQ:PLUG)’s growth potential. A section of the investor community believes that its fuel cell technology will be the next energy breakthrough. Others argue that Plug Power is just another hype that will eventually collapse. The company operates in a sector that has a proven history of unprofitability. But the stock has rallied more than 265% this year so far.