Plug Power: The Slow, Uneasy Transition to Hydrogen


After a decade spent writing that hydrogen was the future I was excited about the rise of Plug Power (NASDAQ:PLUG) last year. Despite a recent drop in price, PLUG stock is currently up about 535% in the past year.

An image of a hydrogen fueling station against a blue sky.

Source: DesignRage /

Plug Power wants to create a market for hydrogen fuel. After building a business in hydrogen-powered forklifts, the company bought a Tennessee plant that could convert waste from ammonia production into hydrogen for sale last year.

Around the time I first wrote about this in October, speculators discovered Plug Power stock. In January, after it signed a warrant deal with Amazon.Com (NASDAQ:AMZN) and a supply contract with Walmart (NYSE:WMT), I again covered Plug Power’s promise. 

Since then, the stock has crashed, falling from $73/share to a recent low below $27. Does this mean the promises were false?


Short Term vs. Long Term

The promise remains, but it’s a long-term promise, not a short-term one. Speculators have no concept of the long-term.

In October, for instance, our Luke Lango predicted a Plug Power move to $35. Based on fundamentals that would make sense, over time. But speculators have no time. They saw the promise as a reality and bid the stock up, far beyond Luke’s target.

That run-up was not justified. It’s going to take years to build hydrogen infrastructure. Right now the market is mainly found in warehouses and utility-grade back-ups from FuelCell Energy (NASDAQ:FCEL), which aren’t usually on.

The promise, however, remains. Last month Plug Power signed a deal to use energy from a hydroelectric plant in Pennsylvania to create hydrogen from water using hydrolysis. Electricity can separate water into hydrogen and oxygen. Plug Power can harvest the hydrogen for fuel. When that fuel is “burned” in a fuel cell, the result is energy and water. I believe the water should be collected for re-use.

Valuing Plug Power

Over the next 5-10 years, Plug Power is going to sign more deals like this. It’s going to sell more hydrogen forklifts, because gasoline engines shouldn’t be running in an enclosed space. Grandview Research projects the hydrogen market will grow at a 5.7% rate through 2028. A Markets and Markets Report is more optimistic, predicting growth of 9.3%. 

Right now, however, most hydrogen comes as a byproduct of oil refining. Ammonia production, which Plug Power is taking advantage of in Tennessee, is also common. So-called “green” hydrogen, as with the Pennsylvania hydroelectric project, is still a small piece of the market. 

Plug Power stock is simply out ahead of its skis. The company is still in the investment stage, losing far more money than it takes in to build an asset base. Most of its assets are still in cash. The current valuation of around $17 billion is hard to justify based on $436 million in property, plant, and equipment, or $1.37 billion in cash.

Plug Power’s decision to bundle research into cost of goods sold, meanwhile, has caused the plaintiff’s bar to cry foul since the stock began falling. Even optimists like Stephen Calder Byrd of Morgan Stanley (NYSE:MS) are calling risk and reward balanced, cutting their ratings on the stock.

The Bottom Line

The stock market is not the economy.

Just because a stock is overpriced, and just because its speculative bubble has popped, doesn’t mean the opportunity is gone.

When I first wrote about Plug Power the stock was trading at $17.60/share. If you bought the stock then, you have a fat profit and should take it.

Hydrogen is a long-term trend. It’s an investment, not a trade. If you are going to buy this stock, as an investment, be prepared to hold it for a long time, and be prepared for some dark times. That’s how great industries are built.

At the time of publication, Dana Blankenhorn directly owned shares in AMZN.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at, tweet him at @danablankenhorn, or subscribe to his Substack

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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