What happened
Investors can't quite make up their minds about shares of Plug Power (PLUG 5.76%) this week.
After the company released its first-quarter earnings update Monday evening, warning of a revenue miss for the quarter but reiterating its longer-term financial targets, investors first sold the stock off ... then bought it back again the next day ... then sold it again on Wednesday.
Today, investors are hopping back onto the Plug train, and the stock was up 2.7% at 10:45 a.m. EDT.
Image source: Getty Images.
So what
Let's consider a couple of numbers that may help give you some context: $10 trillion and $200 billion.
In Monday's update, Plug Power reiterated its objective of grabbing "a meaningful share of the $10T+ hydrogen economy." And if hydrogen fuel cells are really going to generate $10 trillion in annual sales some day, then Plug's promises to generate sales of just $475 million in 2021, $750 million in 2022, and $1.7 billion in 2024 actually sound quite reasonable -- and are a good reason to bid Plug up.
Of course, Plug Power's not doing anywhere near that level of business currently. Its trailing-12-month sales are actually negative, and it's losing money hand over fist (a good reason to sell the stock). But investors can forgive a lot of bad news in the short term if the long term will end with a $10 trillion opportunity -- a good reason to buy it back again.
Now what
But Plug may not even need to prove out the $10 trillion thesis to be worth owning. Consider: In a note in Investor's Business Daily today, J.P. Morgan hypothesizes that the overall market opportunity in fuel cells may not be anywhere near as big as $10 trillion, but it might still exceed $200 billion.
Currently, if you add up the trailing-12-month sales of all four of the major fuel cell stocks -- Plug, Ballard Power Systems, Bloom Energy, and FuelCell Energy -- the total comes to less than $1 billion, according to S&P Global Market Intelligence data. And that means that even if J.P. Morgan's more conservative $200 billion estimate is the correct one, then the hydrogen fuel cell industry can still grow to more than 200 times its current size before it's done.
That's a lot of room for growth. And it could be the reason Plug investors are buying back in today.
