Why Is Plug Power (PLUG) Stock Up 10% Today?


  • Plug Power (PLUG) moved toward supplying electrolyzers to Fortescue (FSUGY) of Australia.
  • The iron ore miner wants to supply hydrogen for shipping and other transport uses.
  • The deal is still subject to negotiation.
PLUG stock - Why Is Plug Power (PLUG) Stock Up 10% Today?

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Plug Power (NASDAQ:PLUG) stock jumped almost 12% on Oct. 10 and another 12% overnight. The company signed a memorandum of understanding with Fortescue (OTCMKTS:FSUGY) of Australia for its green hydrogen plant off Brisbane.

Plug Power will become a preferred provider for a 550 MW electrolyzer contract. It will also take 25% interest in a proposed plant in Phoenix. In exchange, Fortescue will take 40% of Plug Power’s Texas hydrogen plant.

Plug Power is hosting a symposium at its plant in upstate New York today. The stock opened at $7.80 per share.

Australia Plugs In

Fortescue was launched 20 years ago and is Australia’s third-largest mining company. It was founded by Andrew Forrest, now Australia’s richest man. He has recently turned Fortescue away from iron ore and toward green hydrogen, running through several top executives in the process. The mines continue to show a profit while the small hydrogen division is losing money.

The company is now seeking long-term contracts for hydrogen to be supplied from Gibson Island, where it operates an ammonia plant.

Plug Power traded for as much as $67 per share in 2021, after signing contracts to produce “green” hydrogen at an Olin (NYSE:OLN) ammonia plant in Tennessee. The idea is that instead of just selling fuel cells as power supplies for forklifts, it will become a hydrogen supplier.

But Plug Power’s turn has yet to show success. Sales have increased but so have losses. As I wrote in April, the company needs scale to turn itself around.

Fortescue could provide that scale. It could also help provide customers. Forrest has talked about the world having “Stockholm syndrome” regarding its reliance on fossil fuel and how the structures of life on Earth are set to unravel as a result. Investors, in contrast, have said they “really want stability” from mining investments like Fortescue.

What Happens Next for PLUG Stock?

Fortescue still has a chance to walk away from the deal. A final investment decision is expected in December.

As of this writing, Dana Blankenhorn did not hold (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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/10/why-is-plug-power-plug-stock-up-10-today/.

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