Investors perhaps expect Plug Power stock to explode if and when a green hydrogen boom arrives, but will it?
After crashing 24% in August, Plug Power (PLUG 1.03%) stock is going ballistic and just clocked some solid weekly gains — it was up 25.5% at its highest point in trading this week through 9:40 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
The green hydrogen industry is still in its nascent stage, but more companies and economies are recognizing green hydrogen’s potential to help address the climate change crisis. This week saw some notable developments in the industry that are fueling investors’ hopes for Plug Power.
Green hydrogen is getting attention
Australia just revealed a new national hydrogen strategy with government incentives of more than $5 billion as it aims to become a “global hydrogen leader.” India, meanwhile, announced its mission to become a global hub for the “production, utilization, and export of green hydrogen.” Just days ago, auto giant BMW announced plans to launch its first-ever hydrogen fuel-cell electric vehicle in 2028 in collaboration with Toyota Motor.
Closer home, the Department of Energy (DOE) issued a notice of interest this week to fund hydrogen production, infrastructure, and fuel cells in the U.S. A couple of weeks ago, the DOE doled out $62 million in funding for 62 projects. Plug Power received a $10 million grant for a hydrogen refueling station.
This week, Plug Power also signed its first technical evaluation phase (TEP) contract. Plug Power will provide technical support to H2Driven in Portugal for 25 megawatts of electrolyzers for a green methanol project.
Is it time to buy Plug Power stock?
Plug Power is one of the world’s largest green hydrogen companies and is targeting annual revenue of $20 billion and a gross margin above 35% by 2030. That seems like a lofty goal though, given that Plug Power expects to generate only $825 million to $925 million in revenue this year versus $891 million in 2023.
An even bigger problem is money, and Plug Power is banking on a loan worth $1.66 billion from the DOE to build hydrogen plants. If it fails to secure the loan, Plug Power could soon run out of money to even survive. Any rebound in Plug Power stock now, therefore, could just be a dead cat bounce. Beware.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Bayerische Motoren Werke Aktiengesellschaft. The Motley Fool has a disclosure policy.