Adoption of renewable energy has been on the rise across the globe. Everything from government subsidies to growing consumer consciousness has driven its rise. Solar and wind energy typically receive much of the spotlight (and investment dollars). Still, other sources of renewable energy, particularly hydrogen, deserve more attention. Hydrogen energy can be produced through both clean and unclean processes. For example, a natural gas facility could create hydrogen through a reformation and gasification process. On the other hand, clean hydrogen typically can come about through electrolysis.
Despite the utility of hydrogen energy, not every public company operating in the industry has been able to excite investors. Below are 3 hydrogen stocks to sell while you still can.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) is a pure-play hydrogen company that specializes in the development of proton exchange membrane (PEM) fuel cells. These fuel cell systems harness the power of hydrogen to power electric vehicles as well as for electric grids. Moreover, Plug Power has helped logistics companies, including Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN), reduce their carbon footprint by providing them with their GenDrive hydrogen fuel cells for electric lift trucks.
Despite boasting a robust technology stack, Plug Power has struggled to increase sales substantially while costs have burgeoned out of proportion. For example, at the end of 2023, revenue increased to $891 million, but net loss doubled YOY to $1.4 billion.
Plug Power’s management is aware of this cash mismanagement, per their Q1 2024 earnings update. Still, the hydrogen firm’s “enhance[d] focus on cash management” has yet to materialize into healthier margins. PLUG shares have already plummeted nearly 28% on a YTD-basis, making PLUG one of the hydrogen stocks to sell.
Nikola (NKLA)
Nikola (NASDAQ:NKLA) is an electric vehicle maker that focuses on hydrogen fuel cell-powered vehicles for the trucking sector. The EV maker received a lot of hype back during the earlier stages of the pandemic years. Nikola had IPO’d via a special purpose acquisition corporation (SPAC) in 2020 and had been valued at over $3.3 billion. After becoming public, Nikola’s stock reached several highs, one being the company boasting a market capitalization of $28.7 billion.
Looking at Nikola’s current valuation of $714 million, the EV maker has certainly fallen out of favor. A report from Hindenburg Research in late 2020 showcased how the company and its founder Trevor Milton misled investors on multiple occasions. In December 2023, a Manhattan court sentenced Trevor Milton to 4 years in prison for misleading investors.
NKLA share price certainly has in no way recovered, trading at about $0.53/share. If you’re an investor who is still holding this stock, now may be the time to sell.
Ballard Power Systems (BLDP)
Ballard Power Systems (NASDAQ:BLDP) is in the business of designing, manufacturing, and selling PEM fuel cell products. Similar to Plug Power, Ballard Power has focused on developing fuel cells for clean energy vehicles. Ballard Power’s “heavy-duty modules” have between 45 kW and 120kW of net power and are designed for buses, trucks, and trains. The hydrogen firm also offers fuel cell systems for reliable power generation.
While receiving robust demand from European transportation companies, Ballard Power’s order backlog grew 38% sequentially in Q1 2024 to $180.5 million. Whether Ballard Power can reasonably and efficiently execute on this order backlog remains to be seen. The firm delivered around $14.5 million worth of orders in Q1 2024 despite starting the period with $130.5 million worth of orders. This perhaps indicates an elongated ramp-up period and would explain Ballard Power’s need to create another manufacturing facility in Rockwall, Texas.
Ballard Power will likely continue to lag in terms of delivering its fuel cell products until it completes building the facility. BLDP shares have fallen more than 16% on a YTD basis.
On the date of publication, Tyrik Torres 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.
