Shares of hydrogen fuel cell company Plug Power (NASDAQ:PLUG) closed down 2.8% on Monday. With the S&P 500 falling 1.7%, it probably felt like everything was down today, but Plug Power fell more than most.
One reason why that might be happening is a news item Plug itself released Monday morning.
To wit, in a press release Monday, Plug announced that it is "expanding its green hydrogen ecosystem to the West Coast with the construction of a new state-of-the-art production facility in Fresno County, California," aiming to produce "30 metric tons" of hydrogen gas daily from "zero-carbon sources" through electrolysis and emit "only harmless oxygen" as a byproduct from the process. Plug will use the energy from a new 300 megawatt solar farm to power the operation.
And yes, on the one hand that sounds like wonderful news. Plug notes that by 2025, it will have hydrogen production plants operating in California, New York, Tennessee, and Georgia, producing a combined 500 metric tons of "liquid green hydrogen" daily to assist in "decarbonizing light-duty vehicles, freight-transportation, and logistics operations."
Now what Plug Power didn't say is how much all of this will cost. Although Plug Power is currently the best-capitalized fuel cell company on the planet, with $3.8 billion in net cash, Plug plans to begin draining that cash hoard shortly, breaking ground on the California plant in early 2023, for example, and continuing to spend through "complete commissioning in early 2024."
Only then will investors know the full cost of this project (and of the other plants Plug is building) and whether there's enough demand for all this hydrogen to justify the cost and help Plug Power finally reach profitability.
In the meantime, you can expect uncertainty over the costs and benefits to continue to weigh on the stock.