Many stocks have risen sharply from the March 2020 market bottom. Alternative energy stocks were some of the most loved by investors last year, including hydrogen fuel cell company Plug Power (PLUG 1.00%). Its shares are up over 800% over the last 12 months. But those gains have come down from the astounding 1,800% rise as recently as late-January 2021. 

The stock has been in a free fall since then losing more than 50%, and investors interested in renewable energy names might want to know if Plug Power is a good buy now. To decide that, we need to look into why the stock has been cut in half over the last two months. 

Red arrow crashing into the ground, representing stock drop

Image source: Getty Images.

The good

Plug Power announced a series of strategic business moves over the last several months. In January it announced plans with French automaker Groupe Renault (RNSDF 4.27%) to create a 50-50 JV to integrate Plug Power's fuel cell technology into commercial vans in Europe. The JV seeks to claim more than 30% market share in European fuel-cell-powered light commercial vehicles. And in February, the company said it will partner with Acciona, a supplier of renewable energy infrastructure, to launch a 50-50 JV to serve clients in Spain and Portugal. The venture hopes to gain a 20% market share in the green hydrogen business.

It also completed a deal with SK Group that will give the South Korean industrial company a 9.6% stake in Plug Power with a $1.6 billion investment. The two companies will also form a joint venture to establish a fuel cell factory and accelerate the expansion into Asian markets, including China.

The plans to expand into new international markets comes as the company also grows its green hydrogen initiatives in the U.S. Plug Power plans to build North America's largest green-hydrogen generation plant to serve the Northeast. It will use hydropower to make hydrogen in Western New York, and combined with its Tennessee plant, the company expects to supply 500 tons per day of green hydrogen by 2025. When the new plant is fully built, the company said, it "will offer our transportation fuel customers pricing competitive to diesel." 

Plug Power tanker at hydrogen plant

Image source: Plug Power.

The bad

Earlier this month, Plug Power announced that it will need to restate its financial statements dating back to 2018. The company added that there will be "no expected impact on cash position, business operations or economics of commercial arrangements."

The company has had to delay filing its 2020 annual report, and has received a compliance warning from the Nasdaq stock exchange giving it until May 17 to submit the 2020 Form 10-K. Investors don't yet have anything of substance to evaluate with this issue, but it remains an uncertainty until all the revised documents are released. 

It's particularly concerning as Plug Power isn't yet profitable and has charged significant costs in its financial filings that will need to be verified. 

And the ugly 

In its most recent fourth-quarter and full-year 2020 financial release, the company reported revenue of negative $316 million for the quarter and negative $100 million for the full year. Much of that was due to noncash charges related to customer warrants. Plug said, "the charges associated with this program have now been fully expensed and there will be no future charges for this warrant program." But one has to wonder if that statement will hold once the company restates its financials. 

Plug also said in its earnings release that it remains on track to hit its recently raised 2021 and 2024 financial targets, which includes 2021 gross billings of $475 million, up from $450 million. Looking further ahead, the company said it sees 2024 gross billings of $1.7 billion, an increase of more than 40% from prior estimates. 

If those estimates turn into real sales, and the company's expansion plans pan out, the stock could be a good investment in the future of green hydrogen. But with a current price-to-sales ratio of 34 and uncertainty remaining from upcoming financial restatements, even after the recent decline, the company looks overvalued