Although Plug Power (PLUG -0.40%) has been developing hydrogen fuel cells for almost a quarter of a century, its potential has yet to be fully realized. Its investors continue to wait for the company's breakthrough moment.

While its revenue growth is accelerating, its losses continue to widen, disconcerting investors. The stock is down 26% year to date, and sits more than 60% below its 52-week high. The pandemic certainly dealt a setback to Plug Power's plans for reaching $1 billion in annual sales by 2024, and the impacts of the current variant-propelled COVID-19 wave -- and others that might follow -- may push that achievement even further into the future.

All that said, let's see where you would stand today had you invested $1,000 in Plug Power's IPO back in 1999. 

Hydrogen-fueled forklift

Image source: Plug Power.

Growing sales, but widening losses

Overall, long-term investors in the hydrogen fuel cell maker have known two decades of disappointment. The stock has at times ridden a roller coaster of hope upwards, only to see those hopes dashed. For example, earlier this year Plug Power's stock soared to more than $75 a share, only to tumble after management announced it needed to restate its earnings because of changes in how it accounts for some customer contracts.

While the subsequent restatement didn't materially change the equation for Plug Power, the damage was done.

Still, investors have some reasons to believe the company's future will be brighter. After Plug Power handily exceeded its second-quarter guidance for gross billings, management raised its outlook for the full year by $25 million to a total of $500 million -- 50% more than it achieved in 2020 -- on what it described as "exciting news coming up in the coming quarters."

This company's management typically has good visibility into its order flow, and because of the relationships it has built with some of its biggest customers, Plug Power doesn't do short-term planning per se. Instead, it builds out its estimates for what it's going to need three, four, and five years down the road. Investors might take that as a sign management has a clearer sense about the direction the business is heading.

While revenue typically is lower than billings, it's still growing, and an argument can be made that sales growth is more important to Plug Power at this moment than profits.

Heavy dilution has been a reality from the beginning

On the other hand, the lack of profits has led to considerable dilution over the years -- management has repeatedly issued more stock. It kicked off 2021 with yet another secondary offering, this one for 28 million shares. At the end of 2020, it had over 354 million shares outstanding, almost twice as many as it had four years prior.

Yet there were times when those secondary offerings have been smart business moves. The scaled-up stock sale earlier this year was done at $65 per share, an elevated price that ended up netting the hydrogen fuel cell maker $2 billion.

Not all stock sales are bad, even if they do dilute prior investors, as they can be the best available way to raise cash to finance growth. And while Plug Power should have ample resources available to it now for its next phase of expansion, management has disappointed investors in the past and continuously undermined their ownership stake. Shareholders might want to expect a more concrete commitment from management that it won't be more of the same this time.

Dismal returns over the first half of Plug Power's life

Plug Power went public in October 1999 at $15 a share. As of the market close Monday, it was trading for $26.13. However, in 2011, it effected a 10-for-1 reverse stock split to maintain its Nasdaq exchange listing, which management said was important to the health of the company.

That means a $1,000 investment in Plug Power's IPO would have suffered a more than 82% loss of value in the ensuing 22 years, and turned into about $174 today.

But it's fair to say that Plug Power isn't the same company it used to be. Indeed, from the day after that reverse stock split, the fuel cell maker's share price has risen by 574%, more than double what the S&P 500 index has achieved in the same period.

Hydrogen fuel cells are a viable way to power all manner of vehicles and equipment, and as Plug Power moves beyond hydrogen-fueled forklifts, its stock may get a boost, too.