![]() ![]() I do believe that hydrogen - particularly green hydrogen - will play a major role in the future of energy. Buy or not? It's time to prove itself first Simply put, Plug Power's most successful "business" since its IPO hasn't been selling its GenDrive fuel cells it's been telling a great story about the future of hydrogen to investors, issuing and selling new shares, and then using that money to fund its cash-burning operations. If you'd bought 1% of Plug Power the day it went public and never bought any more shares, you'd now own 0.007% of the company. Plug Power went public with less than 5 million shares it now has more than 600 million shares outstanding, a nearly unfathomable 13,860% increase. ![]() This has led to massive value destruction for investors. Sadly, that next big thing has never gone the way of the Amazons or Teslas of the world, two companies that used those initial start-up funds to push through early losses to generate big profits. That's because Plug's business has been entirely subsidized by secondary stock offerings to raise more money to fund the next big thing. In addition, despite stellar returns for its stock in recent years, Plug's stock price is still more than 90% below its post-IPO price and down more than 80% from the price five years after going public. And despite two-and-a-half decades to have built up its core business, the losses are getting bigger, not smaller, as the chart shows. ![]() It has never generated positive cash flow in any year. And Plug Power has never, in its entire public history, been profitable in any year. However, the issue with Plug Power isn't the recent investments: This is a quarter-century-old company. That's been the case for some of the best stocks you could have bought over the past quarter century. Yes, many companies lose money as they are building a base of business and getting established. But the biggest yellow flag - maybe a red flag for some - is how utterly unprofitable the company has been over that long history. Plug Power does have a very long history, and on paper, that should serve it well as demand for hydrogen - particularly green hydrogen - grows. With more than 25 years in business, Plug Power does have deep knowledge of the industry, the big players, and the opportunities. With trailing-12-month revenue of $771 million, Plug Power is spending heavily to build the infrastructure to grow its sales and take its share of this exploding market. ![]() The company estimates a global hydrogen market of more than $2 trillion by 2050 and expects it will play some role in every part of the value chain, including green hydrogen production services and equipment, as well as the fuel cells that power transportation and stationary applications. But the significant decline in the costs of wind and solar now make it feasible to produce hydrogen via electrolysis powered by wind and solar. The dirty little secret of the hydrogen industry is that the majority of it is produced as a by-product of oil or natural gas processing or production, or derived from natural gas. Battery storage will bridge much of this gap, but it also represents an enormous opportunity for green hydrogen. The problem? Matching intermittent supply with demand. And while it's likely that much of that energy will continue to come from hydrocarbons, renewable energy and carbon-free sources including wind and solar continue to take market share. And Plug Power says it's poised to take a big share of this future market. But is that finally about to change? Hydrogen seems to be having its moment, and big partners are lining up to spend billions to access green hydrogen as a fuel source for transportation, shipping, energy storage, and electricity production. ![]()
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