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Why Plug Power's Shares Popped 25.9% Today

By Travis Hoium – Jun 23, 2020 at 2:01PM

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Two big acquisitions could have a big impact on Plug Power.

What happened 

Shares of Plug Power (PLUG -0.14%) jumped as much as 25.9% in trading Tuesday after completing an important acquisition. Shares held gains late in trading and were up 21.8% as of 1:10 p.m. EDT. 

So what

The acquisition of United Hydrogen and Giner ELX was completed, which was a big step forward in the company's vertical integration plans. Financial details of the acquisitions weren't announced but management says these are key additions to get the company to over 50% green hydrogen by 2024, making this much more of a renewable energy stock than it was using hydrogen from natural gas. 

 Symbol for hydrogen made of leaves and floating over a green field.

Image source: Getty Images.

What investors seem to be really excited about is Plug Power increasing its 2024 financial target to $1.2 billion in revenue, $210 million in operating income, and $250 million of earnings before interest, taxes, depreciation, and amortization (EBITDA). That's up from previous targets of $1 billion in revenue, $170 million in operating income, and $200 million in EBITDA. 

Now what

There's certainly a lot of opportunities for Plug Power to grow its hydrogen production and lower costs, but that may only keep the company in-line with expected falling hydrogen costs in the future. What I would be more concerned about is if the company can hit financial targets years into the future. Plug Power has a long history of setting expectations it can't hit, and I'm afraid this is another example of big goals that may be out of reach. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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