Coronavirus Outbreak Could Upset Plug Power’s Drive to $1 Billion

My last Plug Power (NASDAQ:PLUG) article was just before it reported its fourth-quarter results on March 5. The manufacturer of hydrogen fuel cell systems reported healthy growth on both the top and bottom lines.

With Mediocre Fundamentals and a Financing Problem, Avoid PLUG Stock

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Yet, since that article on March 4, PLUG stock has lost 29% of its value.

Is the coronavirus about to throw a wrench in CEO Andrew Marsh’s goal to get to $1 billion in sales by 2024? That’s impossible to know.

What we do know is that the goal was always incredibly ambitious. And the current crisis isn’t going to help, that’s for sure.

For those who’ve been bullish about Plug Power’s technology, the latest dip ought to be viewed as an opportunity to buy the up-and-comer’s stock at a much cheaper price. Further, as the economy continues to worsen, investors could be able to pick up shares under $3.

Below $3, I believe PLUG stock is an excellent speculative buy. Here’s why.

Cautiously Optimistic About PLUG Stock

In my last article about Plug Power, I wasn’t 100% sold on the idea of buying the company’s stock despite the fact I thought earnings would be just fine. And they were.

On the top line, revenues in the fourth quarter were $91.7 million, 53.3% higher than a year earlier, while its operating loss of $7.5 billion was a 41.9% improvement over a year earlier. The stock fell 7% as a result of revenues missing the analyst estimate of $93 million.

A measly $1.3 million miss caused its stock to fall 7% on March 5. The coronavirus did the rest of the damage.

Consider what Plug Power was able to accomplish in 2019:

  • The company’s Q4 2019 gross billings were $94.5 million, more than 50% higher than its previous all time best quarter. For FY2019, gross billings were $236.8 million, 28% higher than a year earlier.
  • Plug Power deployed 2,400 fuel cell units in the fourth quarter and 6,300 for the entire year. In the same periods last year, it deployed 1,900 and 6,058, respectively.
  • It achieved its first year of positive adjusted EBITDA ($9.2 million).
  • It announced its ambitious five-year plan that included a goal of $1 billion in sales, $170 million in operating income, and $200 million in adjusted EBITDA — all by 2024.
  • Plug Power announced a partnership with Street Scooter and DHL to introduce fuel cell-powered electric vehicles (FCEVs) into the courier’s fleet of trucks.
  • It has partnered with Lightning Systems to deliver fuel cell-powered trucks electric vehicles capable of supporting middle-mile delivery logistics.
  • It has built a North American-wide network of hydrogen fueling stations with more than 90 open at the end of 2019, and another 35 expected in 2020.

I’m sure there’s plenty more that I’ve left off this list. The important point is that Plug Power is moving in the right direction.

Plug Power estimates that the global market for FCEVs is $300 billion. It is moving beyond forklifts and other warehouse-related vehicles to capture a chunk of the transportation market.

That’s very good news.

Plug Power Has Tremendous Potential

At the beginning of March, I felt as though the coronavirus was going to get in the way of its stock moving higher. In hindsight, we know this to be true:

“If the coronavirus from China wasn’t an issue, I’d say Plug’s stock is definitely worth buying now. That’s because the momentum of this stock could get it to double digits by the end of the year. However, the coronavirus is an issue, which makes it tough to handicap any stock.

That said, I don’t expect the company to deliver bad [earnings] news tomorrow. But those who are interested in buying the shares might want to hold back some of their powder in case the markets undergo another correction like last week.”

And they did.  However, it’s hard not to see the tremendous potential of Plug Power’s fuel cell systems.

“One thing that makes Plug Power stand out is their participation in a clear and comprehensive road map to success. The company provided input into a data-rich manifesto that explains how America and the world are moving unavoidably towards a hydrogen-fueled economy,” Louis Navellier and the InvestorPlace Research Staff wrote April 1.

“The coronavirus’s impact is going to be a factor, no doubt. Nonetheless, PLUG stock deserves your attention as both the industry and this specific company have compelling road maps to success for years to come.”

I couldn’t agree more.

I generally don’t get too excited about new technologies because my experience has been that things can change rather quickly. One minute, you’re the talk of the town, the next your technology is sitting on the scrapheap of time.

I don’t see that happening to Plug Power. At current prices, PLUG stock is a buy. Under $3, it’s a steal.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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