Analysts can’t seem to agree on Plug Power (NASDAQ: PLUG) stock. According to data compiled by FactSet, some analysts believe shares are worth $18 apiece, while others believe they’re worth as little as $2. One of the biggest bears right now is Citigroup‘s Vikram Bagri, the analyst with a $2 price target.

Why is Bagri so down on Plug Power stock? He recently listed four reasons he believes shares are a “sell.”

4 reasons Bagri isn’t a fan of Plug Power stock

In a recent research note, Bagri downgraded Plug Power stock from “neutral” to “sell,” lowering his price target from $3.25 to $2.00 per share. While he listed four separate reasons for the downgrade, most relate to the same issue: financing.

What exactly are Bagri’s reasons for the downgrade? In the note, he highlighted “limited corporate liquidity, dilution through ongoing ATM issuances, elusive profitability, and increasing competition.”

Limited corporate liquidity is the clearest near-term hurdle. In 2023, the company issued a going concern notice which warned that the company was at risk of running out of cash in the next qw months. Often, going concern notices are issued in advance of a potential bankruptcy. While the company has resolved the issue by raising new funds, those funds heavily diluted shareholders — the second concern listed in Bagri’s research note. In January, Plug Power announced a $1 billion share-issuance agreement that would allow its securities partner to essentially sell massive new blocks of shares at any time.

Bagri believes “this dilution will continue as the company needs more cash and as profitability remains elusive.” And that brings up his third concern: elusive profitability. While Plug Power has been in business for decades, it has never proven able to generate consistent profits. Over the last ten years, for example, it has failed to produce positive earnings over any trailing-12-month period. In more recent years, profitability has dipped even further as the company ramps up expansion plans, which have added a considerable drain on cash flow through increased capital expenditures.

PLUG EPS Diluted (TTM) data by YCharts.

Bagri’s final concern deals with competition. In recent months, Plug Power implemented price increases across all its offerings, including equipment, service, and fuel. Bagri wonders if these price increases are sustainable, given the growth in competitors and the technological advantages of other incumbents. “Raising prices in an oversupplied electrolyzer market may either negatively impact sales more than anticipated and/or the increases may not materialize in the face of competition,” notes Bagri.

Are Plug Power shares really headed to $2?

Right now, Bagri is the biggest bear of any analyst covering Plug Power stock. While his price target is $2 per share, the Wall Street consensus price target is around $4 per share. Who should you trust? The correct answer is likely to trust no one and avoid Plug Power stock altogether.

Legendary investor Charlie Munger famously had three buckets he would separate potential investments into: yes, no, and too hard. Could Plug Power stock soar in the decades to come? Sure, but there’s also a reasonable path toward complete bankruptcy. For most investors, there’s simply too many moving parts here. From financing to competition, it’s almost impossible to predict what will happen to this stock. Your best bet is likely to stick with a stock you can actually gain an edge on.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FactSet Research Systems. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.