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Why Shares of Plug Power Are Tanking Today

By Scott Levine – Aug 12, 2021 at 2:30PM

Key Points

  • Blue hydrogen may be less "clean" than previously thought.
  • Investors may be confusing blue for green hydrogen production.

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The best investors are well-informed investors. But that means reading carefully.

What happened

After popping on Wednesday, shares of Plug Power (PLUG -4.58%) have since retreated, falling nearly 6% on Wednesday and continuing to tumble Thursday. As of 2:15 p.m. EDT, Plug Power's stock is down 4.3% on the day.

It's neither a news release from company nor changes in analysts' ratings that's affecting the stock today. Instead, investors seem to be reacting to some negative press that hydrogen energy is receiving.

A man hold a mug while reading the newspaper.

Image source: Getty Images.

So what

Published today in the journal Energy Science and Engineering, an article is questioning whether hydrogen is the clean-energy alternative that many are touting it to be, and it's drawing media attention. An article on the homepage of The New York Times website references the article, which examines how "blue" hydrogen  -- which uses steam to extract hydrogen from natural gas with carbon capture and storage for the emissions -- produces high greenhouse gas emissions. This calls into question whether hydrogen energy will benefit from the funding for renewable energy projects provided in the current infrastructure bill.

The concern for investors, in all likelihood, is that Plug Power is enthusiastic about expanding beyond fuel cell production and into hydrogen production. In fact, the company reported this week that it broke ground on a hydrogen production plant in Georgia, and it is targeting hydrogen production of 1,000 tons daily before 2028.

Are Plug Power investors right to be concerned? If they read the media coverage closely, they would find that the authors of the article in Energy Science and Engineering were highlighting the problems with blue hydrogen; Plug Power is concentrating on green hydrogen production, which uses renewable energy sources to help extract the hydrogen.

Now what

Today's move in Plug Power's stock seems to be much ado about nothing. It's likely that those who are selling shares based on the critical coverage of blue hydrogen production haven't recognized the difference in what Plug Power is committed to. Yet today's action illustrates an important point. The renewable energy industry -- of which hydrogen represents a particular niche -- is complex, and investors must read through news stories related to their investments carefully lest they capriciously make a misinformed trade.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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