What happened

Fuel cell stock Plug Power (PLUG -4.42%) went on a roller-coaster ride Tuesday, popping 3.1% in early morning trading before giving up all of those gains. Shares closed down 1%. The trajectory was pretty similar to those of most stocks in the sector as investors became cautious ahead of earnings.

So what

Hydrogen fuel cell stocks grabbed the spotlight Monday as the United Nations climate conference, COP26, kicked off in Glasgow, Scotland. Expectations are high because more nations are expected to join the battle to combat climate change.

Tuesday was important from that standpoint, what with more than 40 world leaders signing the Breakthrough Agenda, an international plan to accelerate clean energy efforts through 2030. The Agenda focuses on five goals:

  • Clean power,
  • zero-emission vehicles,
  • near-zero emission steel,
  • sustainable agriculture, and
  • affordable renewable and low-carbon hydrogen.

With hydrogen clearly seen as a key part of the global strategy to transition from fossil fuels to clean energy, investors in leading hydrogen fuel cell stocks like Plug Power are excited.

A Plug Power Gen Drive fuel cell powering a forklift in a warehouse.

Image source: Plug Power.

In fact, Europe said on Tuesday it will commit 1 billion euros to to investing in clean technologies, including hydrogen. In another example, Argentinian President Alberto Fernandez called green hydrogen "one of the fuels of the future" and announced a proposed investment of $8.4 billion by Australia-based Fortescue Future Industries to build a green hydrogen plant in Argentina.

The developments sent hydrogen stocks even higher early Tuesday, but investors soon became wary of their lofty valuations and now await earnings reports to get a real sense of where these companies could be headed.

Plug Power, for example, is expected to announce its third-quarter numbers in mid-November. Just yesterday, Morgan Stanley said it believes Plug Power stock is a buy ahead of its earnings report.

PLUG Chart

PLUG data by YCharts.

It remains to be seen how supply constraints may have affected Plug Power last quarter and whether it can deliver yet another strong report like it did in Q2. For perspective, Plug Power's gross billings and net revenue surged 75% and 83% year over year, respectively, in the second quarter.

Now what

Plug Power has signed multiple deals in the last quarter, and going by its recently announced strong guidance for 2022, a quick calculation suggests the company's 2021 gross billings could cross the $500 million mark versus $337 million in 2020. That's just one of the numbers investors should watch for in Plug Power's upcoming earnings report to gauge whether the company is growing fast enough to justify the stock's recent rally.