Plug Power (PLUG 2.58%) stock rocketed more than 10% in early trading Tuesday, hitting $3 per share before giving back most of its gains and retreating to a single-digit gain. As of 10:20 a.m. ET, Plug stock is still up, but only by 2%.

So why did Plug Power go up in the first place, and why did it give up its gains so quickly?

Plug Power's good news Tuesday

In a note out this morning, investment bank Morgan Stanley predicted Plug Power will receive Department of Energy approval for a $1.7 billion loan by the end of this week, as StreetInsider.com just reported. As the analyst explained, the Biden administration is likely to approve this loan ahead of President Trump's inauguration to "reduce the risk of potential claw-back of this loan."

Assuming Morgan Stanley is right about that, Plug Power is about to get a big bump in its stock price once the loan approval becomes official.

Is Plug Power stock a buy?

So you should buy Plug Power stock, right? Well, not so fast.

The loan approval will be good news if it happens, no doubt. But Morgan Stanley still doesn't think the stock is a "buy," and in fact reiterated its "underweight" rating (i.e., "sell") on Plug stock, and stuck with a $1.75-per-share target price on the shares.

And why did MS do this? Because according to the banker, even $1.7 billion in government money won't be enough to save Plug Power. Remember that the company burned through $1.8 billion in cash in 2023. It continued burning cash through 2024 -- about $892 million in the first three quarters, implying about $1.2 billion in negative free cash flow for all of 2024.

With less than $100 million in cash remaining, and well over $900 million in debt already accumulated, Morgan Stanley thinks Plug Power will have to raise at least $500 million more in cash this year, through sale of new stock.

Loan or no loan, Plug Power stock remains a sell.