What happened

Shares of Plug Power (NASDAQ:PLUG), a leader in fuel cell solutions, plunged 16% last month, according to data from S&P Global Market Intelligence. The hydrogen hopeful's downward slide in the opening weeks of 2018 stands in stark contrast to the sharp rise it enjoyed last year.

Frequently, investors can attribute a stock's slide to specific events such as disappointing earnings releases or negative notes from analysts. In this case, there's no such thing; however, there are some subtle factors that may justify why shares declined.

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Image source: Getty Images.

So what

The drop in Plug Power's stock seems more understandable when stepping back and looking at the company within the context of another fuel cell solutions leader, Ballard Power Systems (NASDAQ:BLDP), since the two companies often move in tandem. For example, both companies soared in 2017. Plug Power rose 97% while Ballard jumped 167%. In January, both companies continued to move in sync for the first few weeks, suggesting that the sell-off -- until the middle of the month -- was simply the result of investors' taking profits after the strong years the companies had reported earlier.

PLUG Chart

PLUG data by YCharts.

However, the major difference between the two companies last month is that Ballard's shares sold off sharply after Spruce Capital released a critical note on the company on Jan. 25. The two companies regained their strides shortly thereafter, though, and ended the month suffering similar declines.

Another likely explanation for the stock's nosedive was anticipation of the company's release of its fourth-quarter and fiscal 2017 earnings report -- the date of which hasn't been announced yet -- since investors have bad tastes in their mouths after the company released its less than electrifying third-quarter earnings report. During Q3, for example, Plug Power reported a rise in operational expenses and a downward revision in its fiscal 2017 free cash flow forecast.

Now what

For investors who have had their eyes on gaining exposure to the fuel cell industry, now may seem like a tempting time to get in the game in light of the stock's recent sell-off. Before doing so, however, they should weigh their actions carefully. Investing in fuel cell companies is rife with risk and should only attract investors with a high risk tolerance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.