Plug Power (NASDAQ:PLUG) is a company attempting to commercialize green hydrogen power technologies. PLUG stock has historically been unsuccessful.

Shares fell from a (split-adjusted) peak of more than $1,000 per share in 2000 to virtually nothing in recent years. It’s proven more difficult and time-consuming to make hydrogen power a reality than its boosters had hoped.

But, perhaps Plug Power has started to turn the corner. Shares soared from $2 in 2019 to as high as the $60s in 2020. While Plug Power has fallen sharply off its recent highs, there are still some signs of both operational and technical momentum. So, has Plug Power finally gotten its business back on track?

A Historically Unprofitable Business

Short sellers have long hounded Plug Power due to its poor unit economics. Plug Power has relied on a few key customers, such as Walmart (NYSE:WMT) to provide a large portion of its revenues. These contracts have come with very low profit margins for Plug Power. Indeed, out of the past five years, Plug Power only managed to generate a positive gross profit in 2019.

Gross profit, you’ll recall, is simply making a profit after subtracting the direct costs of producing a product. This doesn’t include sales, marketing, interest, administrative costs, or anything else. Just the pure cost of producing your goods. On this basis, Plug Power usually sells its equipment at a loss.

If Plug Power sells its hydrogen products at a loss, what’s the business rationale going forward? The idea is that customers such as Walmart are something of a proof-of-concept for Plug Power. The company may be losing money on these deals, but it demonstrates the viability of hydrogen in an industrial setting.

Plug Power’s Growth Strategy

Despite its historic lack of profitability, Plug Power’s plan appears to be working. The company got to more than $500 million in revenues in 2021, which more than doubled any other previous year. Plug Power’s operating losses remain massive; it blew through more than half a billion dollars in net losses last year.

However, its growing scale may enable it to attract more profitable business going forward. In June, for example, Plug announced plans to build a 35-tons-per-day green hydrogen plant at the Port of Antwerp-Bruges.

CEO Andy Marsh explained that: “As Europe grapples with the challenges of climate change and energy security, our agreement with Port of Antwerp-Bruges will deliver much-needed natively generated, green hydrogen to local markets.”

This is logical. Historically, hydrogen has not generally proven competitive against natural gas and other cheaper fuels. However, since the invasion of Ukraine, oil and gas prices have gone sky-high. This has created opportunities for previously fringe technologies such as hydrogen to get a more serious competitive evaluation.

Plug Power’s Financial Situation

As mentioned, the company lost more than $500 million in 2021. Judging from last quarter’s big earnings miss, 2022 isn’t going to be much better. Indeed, as even Plug’s most recent shareholder letter noted, it doesn’t expect to become cash flow positive until year-end 2024. And given Plug Power’s spotty historical track record, its long-term projections should be taken with a grain of salt.

The good news is that Plug Power has an exceedingly strong balance sheet. The company had $3.4 billion of cash and short-term investments as of its latest quarterly report. This far exceeded its long-term debt and other liabilities.

As a result, Plug Power has plenty of cash to fund its current operations and even pay for some potential big near-term projects. The fact that Plug Power won’t have to dilute shareholders is a strong positive in the currently dismal market conditions we see for speculative growth companies.

PLUG Stock Verdict

There’s clear bullish and bearish arguments for PLUG stock today. The bear case is that Plug Power historically has been a very poor business. Given management’s inability to deliver on the business plan for more than two decades, it’s fair to hold the company’s future plans to a high standard.

On the other hand, you can reasonably argue that things have changed. The current energy crisis and inflationary spiral has given hydrogen a real opportunity to become more relevant to the renewable energy discussion. And Plug Power’s past business, while being widely unprofitable, has demonstrated that the technology is operable in major industrial settings.

With Plug Power’s strong balance sheet, it has the opportunity to make something happen. Given current market conditions, I personally am not rushing to invest in speculative unprofitable renewable energy companies. But I can at least see a plausible bullish scenario for PLUG stock, and that’s a sign of progress.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.