Plug Power (NASDAQ: PLUG) is a leading provider of hydrogen fuel cell solutions for the electric mobility and stationary power markets. It designs, develops, and manufactures hydrogen fuel cell systems that replace traditional batteries in electric vehicles and stationary power applications. Plug Power has an extensive customer base across various industries, including material handling, on-road electric vehicles, and backup power generation.
Valued at a market cap of $6.3 billion, Plug Power stock is down 88% from all-time highs. Let’s see if it makes sense to invest in PLUG stock right now.
Is Plug Power stock a buy, sell, or hold?
Plug Power has shown robust revenue growth in recent years, with revenue increasing from $230 million in 2019 to $502 million in 2021 and further to $701 million in 2022. However, the company is yet to turn a profit, with operating losses of $658 million, $415 million, and $576 million in 2022, 2021, and 2020, respectively.
Plug Power's R&D expenses have also increased over the years, reflecting the company's focus on innovation and product development. Additionally, its operating expenses have risen from $78 million in 2019 to over $450 million in 2022.
Plug Power's balance sheet is healthy, with cash and cash equivalents of $2.2 billion and debt of $900 million as of December 2022.
The company explains, “We have applied our suite of turnkey solutions to a large and growing first market in material handling, including blue chip customers in North America and Europe. Our continued focus on product development drives us towards profitability and provides flexibility to pivot into adjacent markets as well as new applications and geographies.”
In March 2021, Plug Power announced a $1.5 billion joint venture with South Korean conglomerate SK Group to develop hydrogen fuel cell solutions for the Asian market. The joint venture aims to sell 500,000 fuel cell systems and establish 15 hydrogen refueling stations in South Korea by 2025.
In January 2021, Plug Power announced a partnership with French car manufacturer Renault to develop fuel cell-powered light commercial vehicles for the European market. The companies aim to develop, manufacture, and sell fuel cell systems and vehicles by 2024.
What next for Plug Power stock price and investors?
Plug Power is the first company to create a market for hydrogen fuel cell technology. With more than 150 patents, it has increased sales by 8x in the last ten years. It quickly identified a market for material handling companies as Plug Power’s fuel cells now power more than 40,000 forklifts. It is now looking to expand its footprint across verticals such as transport, stationary and portable applications.
The company aims to increase green hydrogen production to 500 tons per day by 2025, up from just 9.1 tons per day in 2022. It expects to end 2023 with sales of $1.4 billion and a gross margin of 10%. Due to economies of scale and rapid expansion goals, Plug Power estimates revenue to touch $5 billion in 2026, with gross margins of 30% and an operating margin of 17%.
The final takeaway
While Plug Power's financials may not be strong enough to support a profitable investment at this time, the company's technology and focus on sustainability make it a promising option for the long term.
Plug Power's partnerships and collaborations with major players in the automotive industry demonstrate the potential for future growth and expansion.
Investors should consider Plug Power as a high-risk, high-reward investment opportunity with significant potential upside. However, it is important to note the company's current financial situation and potential risks, such as increasing competition and regulatory changes in the clean energy sector.
Analysts remain bullish on Plug Power stock and expect it to gain 150% in the next 12 months.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
