Plug Power (PLUG -3.75%) investors have been on a roller-coaster ride this year. The stock fell to a low price of around $20 in May from a high of more than $73 in January. At $33, the stock is still 54% off its high price so far in 2021. The company reported strong revenue growth in the first quarter. It has also recently partnered with Renault, SK Group, and ACCIONA for advancing fuel cells and hydrogen fuel.

Let's see if Plug Power's growth, and the fall in its stock price this year, make it a buy right now.

Strong revenue growth

Plug Power's revenue grew to $72 million in the first quarter, up 76% over the year-ago quarter. An increase in the sales of its GenDrive units, which are largely used to power forklifts, drove the revenue growth.

PLUG Revenue (Quarterly) Chart

PLUG Revenue (Quarterly) data by YCharts.

As the above graph shows, Plug Power's revenue has risen significantly over the years. The company reported negative revenue in the fourth quarter of 2020 due to the effect of certain warrants. In addition to revenue growth, Plug Power's gross margins have also improved over the years.

Strategic partnerships to fuel growth

Plug Power has entered into new partnerships this year that could further fuel revenue gains. It has partnered with French automaker Renault to launch a 50-50 joint venture which will target a 30% share of Europe's fuel cell-powered light commercial vehicle market. Plug Power expects 500,000 fuel cell vehicles in use in Europe by 2030.

Notably, that expectation looks unrealistic. There were roughly 35,000 fuel cell electric vehicles (FCEVs) in use globally at the end of 2020. What's more, Korea, the U.S., China, and Japan together accounted for 92% of these vehicles. The rest of the world, including Europe, accounted for just 8%, or fewer than 3,000 FCEVs.

People discussing financial paperwork.

Image source: Getty Images.

Plug Power has also partnered with Korea's SK Group, which has invested $1.6 billion in Plug Power. South Korea leads in advancing FCEVs and accounted for 29% of all FCEVs globally at the end of 2020. The Korean government aims for 6 million hydrogen FCEVs on the country's roads by 2040. In addition to fuel cells, Plug Power will provide fueling infrastructure and electrolyzers through its partnership with SK Group. This collaboration, thus, could provide significant growth opportunities to Plug Power.

Plug Power's other recent partnership is with ACCIONA, a company focused on green hydrogen. The companies jointly plan to target a 20% share of the green hydrogen business in Spain and Portugal by 2030, with an investment of over 2 billion Euros.

These partnerships are crucial as they provide potential growth opportunities to Plug Power outside of its core material handling business, where it largely supplies fuel cells for forklifts. The material handling business hasn't been profitable for the company so far.

Focus on green hydrogen

In addition to its partnership with ACCIONA, Plug Power is working to build a green hydrogen generation network in the U.S. It has announced construction of three new green hydrogen plants in the country. Plug Power targets green hydrogen generation capacity of 500 tons per day by 2025 and 1,000 tons per day by 2028.

Additionally, the company is expanding its fuel cell and electrolyzers production capacity as well as its material handling business. It is also looking to expand in the stationary back-up power market. In the long term, the company sees immense potential for its products in the aviation segment.

A challenging road ahead for Plug Power

All the above developments are surely positive for Plug Power. However, whether the new segments will prove to be profitable for Plug Power or not remains to be seen. The company expects to generate gross margin of more than 30% by 2024. However, it isn't clear how Plug Power will achieve that target. Right now, there are lots of uncertainties surrounding the company's profit potential in the newer segments that it is targeting.

With the availability of cheaper traditional energy and storage options, fuel cells still find limited demand. Though increased focus on cleaner energy sources may change that, Plug Power's pricing power will likely continue to be limited. In the transport segment, a faster adoption of battery electric vehicles may limit growth of FCEVs. Plug Power stock is trading at a forward price-to-sales ratio of 40, which looks too high considering the above risks. For that reason, despite a strong revenue growth, the stock isn't an enticing buy right now.