There’s an argument to be made that Plug Power (PLUG) stock has gotten into oversold territory. Shares of the clean hydrogen and fuel-cell technology company have lost more than 80% of its value from its all-time highs reached in early 2021.
Currently trading at around $12 per share, PLUG stock is down 35% over the past six months, while the S&P 500 index has risen 8% during that span. The shares have lost 50% in one year, while the S&P 500 has gained more than 10%. Notably, this is even as the market for alternative forms of energy, particularly clean energy, continues to grow. While not every company that latches on to the clean energy industry will thrive, PLUG has carved out a niche for itself and is poised to grow.
The clean hydrogen and fuel-cell technology company is set to report second quarter fiscal 2023 earnings result after the closing bell Wednesday. Known for its hydrogen-based technologies including fuel cells and electrolyzers that split water into hydrogen, the company sees itself as the "leading provider of comprehensive hydrogen fuel cell turnkey solutions." While the company has struggled recently with execution, the management has brought Plug much closer to profitability.
The lack of profits is something that has irked investors for some time. However, last month, the management not only boosted its revenue guidance to $1.3 billion, which is now higher than consensus estimates, they also reiterated their annual revenue target of $20 billion by FY2030. For some context, full year 2023 revenue is projected to be $1.28 billion. This means they expect average annual revenue growth of 208% in the next seven years. But in the near term, PLUG must show progress in gross margin improvement for the stock to rebound.
For the three months that ended June, Wall Street expects Plug Power to report a per-share loss of 25 cents on revenue of $237.4 million. This compares to the year-ago quarter loss of 30 cents per share on revenue of $151.27 million. For the full year, which ends in January, the loss is expected to narrow from $1.25 per share a year ago to 88 cents per share, while full-year revenue of $1.28 billion would rise 82.8% year over year.
Founded in 1997, Plug Power manufactures fuel cell products -- the type that replace lead-acid batteries in vehicles and industrial trucks. A few of its large customers are those that have massive warehouses in which transport is required. Among its many customers are Amazon (AMZN), BMW, and Walmart (WMT). Whether the company can reach its lofty revenue goals remains to be seen. But the company recently secured some contracts that puts it on a growth trajectory.
These contracts include an order for 100 megawatts of proton exchange membrane electrolyzers which is the largest announced project in the oil and gas sector in Europe. The company has also secured contracts in Australia, where it was selected to supply two 5-megawatt proton exchange membrane electrolyzer systems for green hydrogen projects in Tasmania. Investors will want to see how quickly these projects can boost the profitability.
In the first quarter, PLUG reported a larger-than-expected loss of 35 cents per share, from a loss of 27 cents per share a year ago. This is even though Q1 revenue of $210.3 million surpassed estimates by $2.52 million. On the bright side, net cash rose 32% to $277 million and the company guided for full year revenues that was well below consensus. Investors on Wednesday are anxious to hear what the company has to say about its profitability growth expectations for both the near term and long term.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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