What’s Happening With Plug Power Stock?

Plug Power (NASDAQ: PLUG), a company that sells hydrogen fuel cell systems that are used in the material handling and power backup space, saw its stock decline by around 12% last week (five trading days), underperforming the broader S&P 500 which was roughly flat during the same period. While the performance of the broader alternative energy sector has been mixed in recent weeks, Plug Power stock also appears to have been hurt by some positive news for a competitor. Hyzon Motors, a company that manufactures hydrogen fuel cell-powered vehicles, announced that it has entered into a memorandum of understanding with TotalEnergies, one of the world’s largest energy companies, to supply hydrogen fuel-cell-powered trucks. Separately, last week, Hyzon also announced a partnership with Chart Industries to develop heavy-duty commercial vehicles. Although Plug Power is more focused on the material handling market presently, it has been looking to move into the broader transportation space and the recent traction by Hyzon is likely being viewed as a negative for the company. So will the declines continue, or is a rally looking more likely for Plug Power stock? According to the Trefis Machine Learning engine, Plug Power stock has a 53% chance of a rise over the next month. See our complete analysis on Plug Power Stock Chances of A Rise For More Details

So is Plug Power stock a buy for longer-term investors? Investors see the company and its fuel cells as a key play on the growth of the hydrogen economy. While traditional renewable energy sources such as solar and wind are being used in the electricity generation and transportation markets, hydrogen is likely to be crucial to helping decarbonize sectors including aviation, shipping, heavy industries, and long-distance trucking. While the stock trades at a relatively lofty 30x consensus 2021 revenues, this is partly justified by strong growth rates (sales growth is likely to stand at over 40% over the next two years). Moreover, Plug stock remains down by almost 60% from its all-time highs seen in January and this could also present an opportunity for investors. That said, the company remains deeply loss-making, with even its gross margins remaining negative and it could be years before the company turns a profit.

See our theme on Hydrogen Economy Stocks for an overview of U.S. companies that sell hydrogen fuel cells, related renewable energy equipment, and supply hydrogen gas.

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