PLUG Stock Remains Tantalizing and Vexing

Last month, I raised this question about Plug Power (NASDAQ:PLUG) stock: what was the harm in waiting to see if the stock’s 2019 rally really had legs? PLUG stock is trading as a penny stock and has been for several years.

PLUG Stock Remains Tantalizing and Vexing
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Stocks that are trading at such levels usually have some sort of fundamental flaw. The real problem with PLUG is one of building critical mass. In the company’s five-year plan, one key driver of future success is the ability for the company to continue growing their partnerships in the material handling sector. However, Plug Power knows that viability will only come from being able to branch out into other areas.

The company may be making good on that part of the plan. Plug Power just announced they will be providing a custom refueling system for the world’s largest hydrogen-powered mine truck. The truck is part of a project between Anglo American (OTCMKTS:NGLOY) and ENGIE.

For its part in the refueling project, PLUG will build a full compression, storage, and dispensing system to service the hydrogen-powered truck. This system will be the first of its kind and produce an output of 1,000 kilograms per day, making it the largest system ever built by the company.

Speaking about the project, Plug Power CEO Andy Marsh stated, “Our partnership with ENGIE is opening the door to exciting new opportunities outside of both the U.S., and the material handling market, where we have continuously demonstrated our expertise.” Marsh also added that the project reaffirmed Plug Power’s position as the world leader in hydrogen refueling.

Plug Power Is Still Looking for Proof of Concept

But being the world leader in a still emerging industry is not easy. Electrification of cars is clearly gaining momentum. And yet we’re still far away from realizing the technology’s full potential. Likewise, the idea of hydrogen fuel cells has been around since the dot-com bubble of the early 2000s. The problem has never been with the science. The problem is how to develop the technology in a scalable way.

One of the ways for emerging technologies to gain viability is through the federal government. However, in the case of hydrogen fuel cells, the U.S. government nearly killed the technology while it was still in its infancy.

In 2009, the nascent Obama administration raised serious questions about the viability of hydrogen fuel cells. President Obama’s first Secretary of Energy, Steven Chu, said that “four miracles” needed to occur for hydrogen fuel-cell transportation to work:

  1. Developing an efficient and low-cost way to produce hydrogen.
  2. Developing a high-density method of storing hydrogen in automobiles.
  3. Building an infrastructure for distributing hydrogen in order to provide adequate refueling options for fuel-cell vehicles.
  4. Improving the capacity of the fuel-cell systems themselves. At the present time, hydrogen fuel cells are less durable, powerful and have a higher cost than the internal combustion engine.

Chu concluded his remarks by saying that the possibility of achieving all four of these breakthroughs would be unlikely. Without the backing of the administration, hydrogen fuel cells were essentially dismissed by the media. And the academic community went into full retreat mode, meaning the best and brightest scientific minds were not applying their talents to the issue of hydrogen fuel cells.

Government Funding Remains at Static Levels

Chu’s remarks came around the time of the American Recovery and Reinvestment Act of 2009. In April of 2009, the U.S. Department of Energy announced $41.6 million in funding to “accelerate the commercialization and deployment of fuel cells; and to build a robust fuel cell manufacturing industry in the United States, with accompanying jobs.”

At the time, this was a dramatic cut in funding for hydrogen fuel cells. However, 10 years later, the funding remains at basically the same level.

Has Anything Really Changed for PLUG Stock?

I bring up this history lesson because there are some who believe that the tide is turning for hydrogen fuel cells. But InvestorPlace’s Vince Martin outlined the problem with investors thinking that this time is different.

You can count me among the skeptics. Right now, hydrogen fuel cells fall into a small niche. Unless that niche can grow, and as long as Plug Power continues to lose money, my original question remains: what’s the harm in waiting on PLUG stock?

As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.

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