Plug Power Is a Long-Term Play, So Don’t Sweat Near-Term Swings

Plug Power (NASDAQ:PLUG) stock has been highly volatile this year for no good reason.

Image of a man driving a forklift in a warehouse.
Source: Halfpoint/

It traded as high as $67/share in January, then nearly touched $20 in May.

It will open this morning at around $35, nearly unchanged for the year. At that price you have a market cap of $18.7 billion on sales that might reach $350 million this year.

The speculation made sense for some investors due to rapid growth.

Revenue for the March quarter was more than 60% higher than a year earlier. Most of the money is still coming from sales of fuel cell systems, not the hydrogen fuel what could mean growth down the road.

A Closer Look at PLUG Stock

Plug stock popped in 2020 on the belief that it can deliver “green” hydrogen, that is, hydrogen fuel produced without using natural gas.

The original business was hydrogen-powered forklifts, and as the first quarter showed that’s still the main business.

Electricity makes sense for warehouse forklifts because it reduces the need for ventilation.

Hydrogen makes sense because it lets a forklift run all day, while batteries might need regular recharging. Walmart (NYSE:WMT) and (NASDAQ:AMZN) both use hydrogen forklifts, and as e-commerce grows so should that business.

But Plug Power wants to be a hydrogen company. What got investors interested was its deal with Olin (NYSE:OLN) to use the “waste” from one of its chlor-alkali plants to produce hydrogen. Olin has dozens of such plants.

When I wrote about this last year, Olin was worth a tiny fraction of Plug Power. Someone must have read that story because Olin has been on fire since, shares rising 173% to $47, while also delivering 60 cents/share in dividends.

Olin earned $1.51/share in the March quarter  as pricing on its chemicals firmed. Olin also makes Winchester ammunition.

Long Term Play

Plug Power has a long way to go to fulfill its potential. While its system sales more than doubled in the first quarter, sales of hydrogen were up only 51% and it represented just 15% of the total.

As I wrote in April, it’s a long-term play. You should not speculate on it based on short-term promises.

Unfortunately, people have been doing just that, writing breathlessly about every twist and turn, as though Plug Power were about to either explode upward or collapse.

Neither is happening. Like Gamestop (NYSE:GME) and AMC Theaters (NYSE:AMC), Plug Power took advantage of new interest in the first quarter to sell stock.

It ended March with over $4.3 billion in cash, reducing debt to $139 million. That means it can sustain operating losses of $117 million/quarter, even build more plants, without financial strain. Thanks, short-term speculators!

Our Chris Tyler recently looked at Plug stock. He saw that it fell because General Motors (NYSE:GM) announced it will sell fuel cells for Wabtec locomotives.

It makes no sense to call this a negative for Plug Power. Locomotives and forklifts are different markets. Both need hydrogen. The whole point of Plug Power today is that it will become a producer of hydrogen, which can go into locomotives as well as forklifts.

The Bottom Line on PLUG Stock

The excitement over Plug Power producing hydrogen is early. Olin was the better short-term play. It produces the feedstock from which Plug Power was making its hydrogen.

But it’s not Plug Power’s only potential source of supply. It signed a deal in April to produce hydrogen from a Pennsylvania dam using its electricity to draw the fuel directly from water.

It also now has a $200 million fund for hydrogen infrastructure with Chart Industries (NYSE:GTLS), which makes cryogenic equipment, and Baker Hughes (NYSE:BHI), the oilfield services firm.

Deals like this are where its future is coming from, and it’s a long-term future.

On the date of publication, Dana Blankenhorn held LONG positions in AMZN. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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 or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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