Plug-in power supply(NASDAQ: PLUG) is on a mission to deliver sustainable and clean energy with its innovative hydrogen fuel cells. According to an estimate from consultants at Deloitte, the green hydrogen market could skyrocket to as much as $1.4 trillion by 2050, giving Plug Power enormous upside potential.
However, the clean energy company has faced major challenges in recent years. After peaking at around $75 per share in 2021, the stock has since tumbled as much as 97% as it faces business challenges and an ever-evolving environment.
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Plug Power may seem like a bargain, as its shares have fallen significantly and are trading below $3 per share. But before you buy shares in the company, there are some things you’ll want to consider first.
Plug Power is developing hydrogen fuel cells and wants to create a commercially viable market for this advanced technology. The vision is to create a comprehensive hydrogen ecosystem that includes the production, storage, transportation and distribution of liquid green hydrogen.
Plug Power’s innovative fuel cell technology uses the power of hydrogen and oxygen to generate clean electricity without combustion. This technology powers material handling vehicles such as forklift trucks, stationary power plants (generators) and electric delivery trucks. Some of the most recognizable customers include Amazon And Walmart.
Last year, Plug Power launched a 30,000-square-foot fuel cell manufacturing facility in New York, designed to meet growing demand for its fuel cells. Earlier this year, the company began producing liquid hydrogen at its hydrogen production facility in Georgia, and it has plans for additional plants in New York, Louisiana and Texas.
Image source: Getty Images.
Plug Power’s revenue growth was solid; Revenue grew 27% last year to $891 million. However, this growth has reversed in the past year. Through three quarters of 2024, Plug Power’s revenue was $437 million, down 35% compared to the same period last year.
The company is struggling with slowing sales of its hydrogen infrastructure. This year the company had 11 hydrogen installations, compared to 41 last year, as the hydrogen economy developed more slowly than expected.
These slowing sales come as the company continues to drain cash. Through September 30, Plug Power has posted an operating loss of $720 million, compared to the loss of $718 million in the same period last year. Over the past twelve months, the company has lost nearly $1.5 billion.
PLUG Revenue Data (TTM) according to YCharts.
Plug Power is taking steps to improve margins and reduce cash burn. Earlier this year, it hired Dean Fullerton as its new Chief Operating Officer (COO). Fullerton recently oversaw engineering services for Amazon in North America, Europe and emerging countries and will look to help Plug Power improve operational efficiencies across its supply chain.
The company recently reported third-quarter revenue of about $174 million, well below analyst expectations of $210 million.
The expectations for the rest of this year and next year were also disappointing. The company forecast lower growth next year and said it expects revenue to be between $850 million and $950 million, below analyst estimates of $1.18 billion.
The long-term market opportunities for green hydrogen could be enormous. Plug Power still has a lot of work to do, however, as the company navigates challenging times for the industry and looks to grow while also slowing its cash burn rate.
Plug Power has been significantly diluting shareholders for several years to finance its money-losing operations. Over the past decade, Plug Power’s outstanding shares have increased from 173 million to nearly 880 million. In other words: one share is worth 80% less due to dilution alone.
While the long-term opportunities in green hydrogen are attractive, Plug Power still has significant work to do to improve margins and the bottom line. For that reason, investors should avoid investing in the hydrogen company until significant improvements are made.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Amazon and Walmart. The Motley Fool has a disclosure policy.
Should you buy plug-in power when it’s under $3? was originally published by The Motley Fool
