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Why plug power shares are soaring today

After falling 7% last week, Plug Current (NASDAQ: PLUG) The stock has soared since this week. Hydrogen and fuel cell stocks rose 13% yesterday and are poised to make even bigger gains today thanks to the company’s announcement that it has secured a government loan guarantee.

As of 10:34 a.m. ET, shares of Plug Power are up 34.8%.

Look at the government loan

Plug Power announced today that it has received a conditional commitment for a loan of up to $1.66 billion from the Department of Energy. The loan will help the company advance the development of six green hydrogen production facilities. The facilities, located across the United States, will supply green hydrogen to customers operating in the material handling, transportation and industrial sectors.

Andy Marsh, CEO of Plug Power, praised the loan, saying, “Earlier this year, Plug successfully demonstrated our innovation and technical capabilities by launching the nation’s first commercial-scale green hydrogen plant in Woodbine, Georgia. This loan guarantee will help us help build on that success with additional green hydrogen factories.”

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Plug Power has ambitions to become a major supplier of green hydrogen. With regard to its North American network, Plug Power targets daily green hydrogen production of 500 tons by 2025. By 2030, Plug Power targets daily green hydrogen production of more than 2,500 tons from its global network.

Does the new access to capital make Plug a buy?

At first glance, the news of the government loan may seem like a positive development for Plug Power, and it may prompt some to wonder whether feeding their portfolios with Plug is a smart idea. For now, though, they should keep their distance and watch Plug’s story from the sidelines and consider other hydrogen stock opportunities.

The government loan could help Plug build out its hydrogen production infrastructure, but there are no indications that the company is closer to achieving profitability than before. And because profitability continues to elude the company, Plug should remain on the buy list only of investors with a wide tolerance for risk.

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Should you invest €1,000 in Plug Power now?

Consider the following before purchasing shares in Plug Power:

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Plug Power Stock Is Soaring Today was originally published by The Motley Fool

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