What happened
Shares of Plug Power (PLUG 2.62%) rose as much as 17% for the week, as of the end of trading on Thursday, June 24. The hydrogen power cell company's rally came despite what was actually a pretty weak earnings report on June 22. The thing is, when it comes to a growth-oriented name like Plug Power, the here and now sometimes takes a back seat to the future growth potential investors are expecting. Here's a quick look at the "meh" earnings numbers and the positive things the company had to say about the future.
So what
Plug power generated first-quarter 2021 revenue of roughly $72 million, up from $40.8 million in the same period of 2020. That's a huge increase, but it fell shy of analyst expectations, which were closer to $77 million. The company fell short on the bottom line, too, with a loss of $0.12 per share compared to the Wall Street consensus of an $0.08 loss per share. The $0.12 per share of red ink, for reference, was in line with the first quarter of 2020. Summing things up, the numbers weren't great in a quarter where the company's earnings release also happened to be hit by some accounting-related delays.
Image source: Getty Images.
You might have expected Plug Power's stock to fall, given that backdrop. However, the company's hydrogen power cell focus puts it squarely in the clean energy space. This area is expected to see material growth in the coming years as the world shifts away from carbon-based fuels like oil and coal. Plug Power's current projections call for $1.7 billion in gross billings by 2024, but just $475 million in 2021. During Plug Power's first-quarter 2021 earnings conference call, management reported that it was currently 40% of the way to the 2021 goal, better than the 33% it had achieved toward full-year goals at this point in the calendar in the past. Basically, management laid out ambitious growth numbers for the next few years and hinted strongly that it is ready to live up to the challenge.
To back that outlook up, it outlined some of the things it is working on. The list includes strategic partnerships with Renault, SK Group, and Acciona, and plans to build three new production facilities, all of which are expected to be up and running by early 2023. Plug Power also highlighted further progress in its work with General Motors, bringing fuel cell powered forklifts (and other such vehicles) into the giant automaker's factories. And it is working on large-scale power systems that can replace diesel-powered backups at data centers, which could become an increasingly important end market.
These were some of the top-level highlights in what was a very dense business update (that actually included a couple of additional prospective growth catalysts, as well). All in, investors seem to like the upbeat outlook provided by Plug Power when it reported earnings this week, and chose to overlook the less-than-inspiring first-quarter results.
Now what
Plug Power is one of a small number of public companies working on fuel cells, a technology that is really only just starting to gain more material traction. Since it is still early days, most conservative investors will probably want to keep watching from the sidelines. However, the growth potential, assuming hydrogen becomes an important clean-energy fuel, could be quite material. The company's growth projections highlight the opportunity. And that might interest more aggressive investors willing to bet on emerging technologies.
Just go in knowing that volatility could be high, with positive and negative news likely to result in sometimes unpredictable price swings. But that's really just par for the course when you are dealing with a highly focused growth company like Plug Power.
