Plug Power (NASDAQ: PLUG) is an American company that specializes in developing hydrogen fuel cell systems that replace traditional batteries in electric-powered equipment and vehicles. Headquartered in Latham, New York, Plug Power also has facilities in Spokane, Washington, and Rochester, New York.
Plug Power: The face of green hydrogen
Plug Power offers a green hydrogen ecosystem that covers everything from production and storage to delivery and energy generation. The company develops practical hydrogen and fuel cell solutions. Plug Power’s portfolio includes electrolyzers that enable industries like refineries, chemical producers, steel manufacturers, fertilizer companies, and commercial refueling stations to generate hydrogen right on-site.
Plug Power focuses on industrial mobility applications by providing electric forklifts and industrial vehicles suited for high-volume manufacturing and distribution centers. The company also offers stationary power systems that support services such as data centers, microgrids, and power generation facilities.
Plug Power systems can function as backup or continuous power sources, effectively replacing traditional batteries, diesel generators, or grid reliance for customers in telecommunications, logistics, transportation, and utility sectors.
The company’s flagship GenDrive system, which includes fuel cells made by both Plug Power and Ballard Power Systems, features a hydrogen storage component that allows for rapid “recharging” in just minutes, unlike the long charging times required for lead-acid batteries.
A brief history of Plug Power
Founded in 1997 as a joint venture between DTE Energy and Mechanical Technology Inc., Plug Power went public in October 1999. After its IPO, the company was hit with a shareholder class action lawsuit for securities fraud.
The lawsuit claimed that Plug Power made misleading statements about its fuel cell technology and its partnership with General Electric. The matter was settled in December 2004, with Plug Power’s directors paying $5 million to the plaintiffs.
In 2021, South Korea’s SK Group invested $1.5 billion in Plug Power, acquiring a 10% stake and forming a joint venture to supply hydrogen fuel cell products to Asian markets. The same year, Plug Power entered into a memorandum of understanding with French automaker Renault to launch a joint venture in France by mid-2021.
In early 2021, Plug Power ran into some financial reporting issues. The company informed the U.S. Securities and Exchange Commission (SEC) that it couldn’t file their annual report on time for the year ending December 31, 2020.
Just two weeks later, Plug Power said it needs to restate its financial statements for 2018 and 2019, along with some recent quarterly reports. This has sparked ongoing litigation, with shareholders filing a class action lawsuit accusing Plug Power of securities fraud for not disclosing weaknesses in their financial reporting controls.
Plug Power stock journey
Plug Power shares have been a bumpy ride, with a steady decline since early 2021. Once valued as high as $70 per share, the stock now sits below $3. Wall Street has repeatedly misjudged the PLUG stock’s direction, with nearly a dozen firms backing a buy rating just before the shares took a sharp downturn in 2021.
Wall Street’s expectations for Plug Power stock have dropped since its peak, yet the average price target still hovers around $5 per share—more than twice the current price. Could analysts finally be on the mark? Is it time to take a big bet on Plug Power? Keep reading to find out the answer.
Is Plug Power stock a Buy?
Analysts have struggled to accurately predict the path of Plug Power Inc.’s stock, primarily because the company’s expected cash flow inflection point might still be years, or even decades, away.
Without a sudden shift in regulatory policies, it is likely that demand for hydrogen fuel cells will not reach a major turning point until at least 2030. In the meantime, Plug Power is expected to continue spending heavily on capital expenditure while operating at a loss.
Over the past year, Plug Power invested between $100 million and $200 million per quarter in building new plants and infrastructure needed for growth. Despite these investments, Plug Power racked up over $1 billion in net losses during the same period, which is more than half of its current market value.
The big question now is whether this time will be different for Plug Power. Analysts have widely varying predictions, with price targets ranging from as high as $19 per share to as low as $1.52. This broad range shows just how uncertain the outlook for Plug Power’s stock really is.
Conclusion
As of August 2024, Plug Power’s market cap stands at $1.93 billion. However, Plug Power is in a tough spot as ongoing losses push the company to continuously seek additional funding through debt and equity markets.
With positive cash flows still years away, Plug Power’s ability to invest in new innovations is limited, giving competitors a chance to develop more efficient and cost-effective solutions. Given this uncertainty, investors might want to hold off on getting involved for now.
