Last fall, Plug Power (PLUG 6.10%) issued a dire warning. The hydrogen company projected at that time that it didn't have enough liquidity to fund its operations through the next year. That caused investors to worry that it might not be able to continue as a going concern.
However, those concerns are now in the rearview mirror. Plug Power has plugged the holes in its liquidity and how has the fuel to continue operating. Here's a look at whether that makes the hydrogen stock a buy.
Shoring up its liquidity
Plug Power recently reported its fourth-quarter and full-year results for 2023. The company noted that it has now resolved the going concern issues it raised at the end of the third quarter. It has sufficient cash on hand and available liquidity to fund its operations for the foreseeable future.
The company has taken several steps to shore up its financial position. Last month, it unveiled a cost-reduction plan that will save it about $75 million per year. It also entered into an agreement with investment bank B. Riley Financial for an at-the-market (ATM) offering to raise up to $1 billion in cash. Like an ATM machine, this arrangement will enable the company to get cash when needed by selling stock to B. Riley Financial. Plug is also working to finalize a loan agreement with the Department of Energy for a $1.6 billion loan facility. As a result, the company now believes it has the cash and liquidity sources to continue operating.
However, Plug Power doesn't plan to stop there. CEO Andy Marsh stated in the company's fourth-quarter earnings release, "Recognizing the past challenges with cash management, we are dedicated in 2024 to bolstering our financial profile." The company aims to optimize its financial operations to make sure it has the financial flexibility to capitalize on future market opportunities.
The case for buying Plug Power
With the hole in its liquidity plugged, the company can focus on capitalizing on the massive opportunity ahead for hydrogen. According to Deloitte, the global hydrogen market will eclipse the value of the worldwide liquefied natural gas (LNG) market by the end of this decade. It could reach a jaw-dropping $1.4 trillion by 2050.
Plug Power is investing heavily to capitalize on this massive growth opportunity. It recently commissioned its Georgia hydrogen plant, the largest of its kind in the country. It's developing several others across the country and in Europe. The company believes these investments will grow its revenue from $891 million last year to as much as $20 billion by 2030.
That exponential revenue growth should enable Plug Power to start generating profits and cash flow, allowing it to fund its expansion internally. That growth could give the company's stock the fuel to rally spectacularly in the future.
The case against Plug Power
While Plug Power holds lots of promise, it also has lots of issues. A big problem is that it's losing money hand over fist. Plug Power posted a staggering $1.4 billion loss last year -- nearly double 2022's total -- on only $891 million in revenue (27% more than 2022). On one hand, that was partly due to writing down $325 million of assets. However, even after adjusting for that non-cash charge, Plug still lost over $1 billion last year, even though revenue increased. The driver was its heavy investments in growth.
The company's mounting losses have cost shareholders dearly. Shares are down a gut-wrenching 75% over the past year. They've now lost nearly 97% of their value since the company went public more than 20 years ago.
Because the company is losing so much money, it has had to sell stock to fund its operations. That's driven up its outstanding shares. They're up over 170% over the last five years and 348% over the past decade. They will likely continue climbing as the company issues more through its ATM program. At its current $2.3 billion market cap, its ATM program would increase its outstanding shares by more than 40%. That could put more downward pressure on the stock price.
Plug needs to demonstrate it can deliver
Plug Power holds tremendous promise as it seeks to capitalize on the potentially massive hydrogen opportunity. However, the company has been an abysmal investment over the years as it has failed to live up to its potential.
With its business still bleeding money and its share count likely to keep rising, it could continue to struggle to create value for shareholders in the near term. It's an extremely high-risk bet right now. While it could pay off spectacularly over the long term, it could also continue to lose money for investors. Given the high risk of a loss, investors might want to wait to see if the company can finally start delivering on its promise before buying shares.
Matt DiLallo 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.
FAQs
Long-Term Plug Power Stock Forecast for 2027–2030
CoinPriceForecast expects Plug Power's stock to move in a stable upward range from 2027 to 2032. In mid-2027, the price will reach $4.65 and grow to $5.25 by December. Further growth from $5.84 to $6.42 is projected for 2028. The year 2029 is expected to close at $7.57.
Is Plug Power in trouble? ›
After issuing a "going concern" warning in late 2023, Plug Power said it had resolved the issue in March after signing an agreement to sell shares to investment bank B. Riley Securities and securing a term sheet with the Department of Energy (DOE) for a loan of $1.6 billion.
What is the best hydrogen stock to buy now? ›
Performance Comparison
- PLUG. Plug Power. 2.40. -10.72. -81.71%
- NFE. New Fortress Energy. 19.42. -8.74. -31.04%
- APD. Air Products and Chemicals. 264.23. -33.05. -11.12%
- BE. Bloom Energy. 13.07. -4.79. -26.82%
- BLDP. Ballard Power Systems. 2.20. -2.52. -53.39%
- FCEL. Fuelcell Energy. 0.49. -1.70. ...
- LIN. Linde. 450.85. 65.05. ...
- CMI. Cummins. 289.04. 35.19.
Average Price Target
Based on 21 Wall Street analysts offering 12 month price targets for Plug Power in the last 3 months. The average price target is $4.39 with a high forecast of $18.00 and a low forecast of $2.00. The average price target represents a 76.31% change from the last price of $2.49.
Will PLUG ever be profitable? ›
Analysts anticipate that the company will remain unprofitable on a full-year basis until 2026, with its first profitable year expected in 2027.
What is the future forecast for Plug Power in 2030? ›
Plug Power has dreams of massive growth
In 2027, executives expect to generate $6 billion in revenue. By 2030, they believe the business could bring in around $30 billion in revenue. These are incredible estimates when you realize the current market cap for Plug Power is only $2 billion.
Is Plug Power a good company to invest in? ›
Plug Power (PLUG) has garnered a large number of contracts for global electrolyzer projects. Plug Power expects to benefit from federal tax credits at the company's Georgia-based facility. Risk-tolerant investors might choose to purchase a few shares of Plug Power stock.
What is the prediction for Plug Power? ›
Based on short-term price targets offered by 22 analysts, the average price target for Plug Power comes to $4.94. The forecasts range from a low of $2.00 to a high of $18.00. The average price target represents an increase of 112.93% from the last closing price of $2.32.
What is the financial situation of Plug Power? ›
Plug Power Financial Overview
Plug Power's market cap is currently ―. The company's EPS TTM is $-2.389; its P/E ratio is -1.04; Plug Power is scheduled to report earnings on August 5, 2024, and the estimated EPS forecast is $-0.31. See an overview of income statement, balance sheet, and cash flow financials.
What hydrogen company is Amazon buying into? ›
In 2022, Amazon (NASDAQ:AMZN) signed a green hydrogen supply deal with Plug Power. The agreement will provide the e-commerce giant with emissions-free fuel to power some of its fleet starting in 2025. As part of the deal, Amazon received warrants to buy as many as 16 million shares in Plug Power.
1. Linde (NYSE:LIN) Leading global industrial gases and engineering company Linde has been producing hydrogen for more than a century and is a pioneer in new hydrogen production technologies.
Are hydrogen shares worth buying? ›
With such a strong structural backdrop for growth, investing in hydrogen shares could be highly rewarding. Having said that, stocks in the sector also come with higher risk. The businesses are at an earlier stage of development than some in other areas of the renewable energy market.
Can Plug Power survive? ›
PLUG Does Pose Risk, But It Should Pull Through
Plug burned $380 million of cash last year and $1.58 billion of cash in 2022, while it had just $135 million of cash and short-term investments as of the end of 2023.
Where will PLUG stock be in 5 years? ›
If analysts are correct in their price target assessments, Plug Power stock has the potential to rise 23.1% to $4.79 per share over the next 5 years.
What is the problem with Plug Power stock? ›
The delayed filing of its annual report for 2020, a messy restatement of all of its financials for 2018 and 2019, a series of class action lawsuits from its investors, and high interest rates all exacerbated that pressure. But after that steep decline, Plug Power's stock only trades at 2 times this year's sales.
What will Plug Power revenue be in 2025? ›
The analysts aren't nearly as optimistic. They expect Plug Power to only generate $1.43 billion in revenue in 2025 -- which would still represent a compound annual growth rate (CAGR) of 27% from 2023 -- as it narrows its annual net loss to $431 million.
What will plug stock be worth in 2025? ›
What is the Plug Power stock prediction for 2025? According to our Plug Power stock prediction for 2025, PLUG stock will be priced at $ 4.15 in 2025. This forecast is based on the stock's average growth over the past 10 years.
What is the projected price for Plug Power? ›
Based on short-term price targets offered by 22 analysts, the average price target for Plug Power comes to $4.94. The forecasts range from a low of $2.00 to a high of $18.00. The average price target represents an increase of 112.93% from the last closing price of $2.32.
What is the Plug Power price prediction for 2050? ›
Plug Power AI Price Prediction for 2050
According to our technical analysis of Plug Power AI prices for 2050, the projected minimum and maximum prices are approximately $0.01405 and $0.3241, respectively. The anticipated average trading cost stands at about $0.2367.
