What happened
It looks as if Friday will be a rough day for renewable energy stocks in general and hydrogen fuel cell stocks in particular.
In 11:40 a.m. ET trading, shares of Plug Power (NASDAQ: PLUG) were down 12%, followed by lesser declines of 6.9% for Bloom Energy (NYSE: BE) and 5.9% for Ballard Power Systems (NASDAQ: BLDP). West Virginia Senator Joe Manchin appears to be to blame for the declines, as The Washington Post reports today that the Senator has rejected overtures from the White House and from his Senate and House colleagues to support a budget proposal including tax credits to encourage green energy adoption, as well as other credits to subsidize the purchase of electric cars.
So what
Details on what specific credits and subsidies the White House proposed are missing from the reports -- but they're also probably moot because, without Manchin's support, the administration is unlikely to garner the 50 Senate votes it would need to pass any bill subsidizing green energy. Investors are understandably disappointed by the news -- but here's the thing:
While fuel cell companies would presumably welcome any additional billions of dollars of support the government wanted to offer them, such extra support is not really necessary. After all, the $1.2 trillion bipartisan Infrastructure Investment and Jobs Act that was passed in 2021 already includes "$8 billion for development of a number of large-scale Regional Clean Hydrogen Hubs across the country, $1 billion for Clean Hydrogen Electrolysis Research and Development, and $500 million in funds for Clean Hydrogen Manufacturing and Recycling," according to a press release published by the Fuel Cell and Hydrogen Energy Association last year.
Add those numbers up, and the fuel cell companies already stand to reap some $9.5 billion in subsidies for their industry from the government -- about 5.5 times the total revenues collected by all three of these fuel cell stocks over the past year combined.
Now what
Simply put, $9.5 billion is nothing to sneeze at. Granted, it hasn't been enough to turn any of these companies profitable yet -- but it might if given a bit more time for the subsidies to be distributed.
Currently, analysts polled by S&P Global Market Intelligence are forecasting that both Plug Power and Bloom Energy will turn GAAP profitable by 2024 ($0.02 per share and $0.28 per share, respectively). Ballard's a bit farther away from turning a profit -- no sooner than 2028, according to the analysts. But if they are right and even just some of the fuel cell companies are able to begin earning profits within just the next two years based on the success of their own businesses plus the subsidies included in the original infrastructure law, Sen. Manchin's vote on a second infrastructure bill might not be needed after all.
And even in that bill's absence, fans of the hydrogen revolution still have two potentially profitable stocks worth considering.
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