Shares of hydrogen fuel cell pioneer Plug Power (NASDAQ:PLUG) are clawing their way back after a staggering 12.5% decline earlier this morning. As of 12:45 p.m. EST, Plug Power is down "only" 5%.
Why? This morning, Plug Power management held a conference call with analysts to discuss its "preliminary 2018 results and 2019 growth plans." Sketched out in an accompanying SEC filing, Plug described how it expects to soon report $182 million to $185 million in "gross billings" (otherwise known as revenue) for 2018, a more than 40% increase over 2017, and how it plans to grow this number more than 30% in 2019, to somewhere between $235 million and $245 million.
The company also predicted it would produce positive adjusted EBITDA in 2019.
That sure sounds like good news. So why did Plug stock sell off so hard this morning?
Well, consider what you see if you read between these lines. The fact that Plug says it will turn sort of, kind of profitable in 2019 implies first that Plug will not do as well as that in 2018 -- because if Plug thought it could produce even an "adjusted EBITDA" profit in 2018, it probably would have said so.
And of course, even adjusted EBITDA -- short for earnings before interest, taxes, depreciation, and amortization -- is far short of actual profitability. The fact that this is the best Plug can promise even in 2019 means the company doesn't think there's even a chance it will earn a real GAAP profit this year.
Long story short, Plug expects to report strong sales growth when Q4 2018 and full-year 2018 earnings are finalized then to grow sales strongly again in 2019. The problem, of course, is that public companies are supposed to do more than just sell lots of stuff. Ideally, they're supposed to earn profits from these sales.
Plug hasn't earned a single full-year profit in the past 20 years. I can't say it won't earn a profit at any point in the next 20 years, either...but if past performance is any guide, neither can I say I'm optimistic.