What happened

Turnabout, so they say, is fair play. So it seems appropriate that FuelCell Energy (NASDAQ:FCEL) stock -- which helped send rival Plug Power (NASDAQ:PLUG) higher last week on news of FuelCell's big increase in Q4 sales -- is now getting a boost of its own out of positive news from Plug.

This morning, as you may have heard, Plug Power released its long-awaited business update, boasting that it has already beat its 2020 financial guidance and is well on its way to beating in 2021 as well.

Arrow angles up on a green stock chart

Image source: Getty Images.

So what

Plug Power stock is naturally higher on the news -- up 13.5% as of 12:15 p.m. EST. But FuelCell stock is rising right alongside it. Indeed, with a 18% gain, FuelCell stock is outperforming Plug. (The other fuel cell names, Bloom Energy (NYSE:BE) and Ballard Power Systems (NASDAQ:BLDP) are both up as well, in case you're wondering -- 3.3% and 5%, respectively).

So what did Plug say to start all this commotion? According to the company, which has not yet reported its official numbers for fiscal 2020, it has nonetheless exceeded its "2020 gross billings target." With the wind at its back, Plug has raised guidance for fiscal 2021 to $475 million in gross billings, and has raised its long-term, 2024 goal to $1.7 billion in gross billings.

Now what

If you recall, when last we heard from Plug, it was predicting that by 2024 it would bill $1.2 billion and earn $200 million in operating profits on that sum. Today's new guidance implies 40% more revenue. If profits rise by a similar amount, then Plug might be looking at $280 million in operating profit within three years from now (versus $87 million in operating losses over the last 12 months).

Good news for Plug? Absolutely -- if it hits those numbers. (But most analysts on Wall Street have their doubts. Consensus estimates on S&P Global Market Intelligence show Plug doing less than $1.5 billion in revenue, and earning less than $180 million, in 2024.) Still, what does this mean for FuelCell?

Three years from now, according to those same analysts, FuelCell might be doing barely $200 million in annual revenue and still losing money. If Plug grows as fast as it's promising to grow, though, and reaches profitability before FuelCell does as well, you have to wonder if by the time 2024 rolls around, FuelCell will still be in a position to compete with it.

Considering that risk, investors' decision to bid up FuelCell stock on Plug's good news today -- and more than that, to bid up FuelCell stock faster -- seems nonsensical to me.

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.