What happened

It may be Black Friday, but investors are seeing red. Fears of a new COVID-19 variant discovered in South Africa shook the markets Friday, and hydrogen and fuel cell stocks were caught up in the pessimism.

At the 1 p.m. ET close of Friday's abbreviated trading session, shares of Plug Power (NASDAQ:PLUG), Nikola (NASDAQ:NKLA), and Bloom Energy (NYSE:BE) were down by 6.2%, 1.9%, and 3.7%, respectively.

A concerned woman looks at her smartphone.

Image source: Getty Images.

So what

As investors returned their attention to the news Friday after gobbling their turkey and piling on the sides on Thursday, they were presented with a disconcerting prospect: World leaders and medical professionals are waving warning flags due to a newly identified COVID-19 variant. And it's not merely the variant that's causing concern. Some European nations had already begun to implement new lockdowns in recent days in response to escalating cases.

Why are these issues affecting hydrogen-focused stocks? It's likely due to fears that U.S. states will need to impose similar lockdowns, which would impede the growth of those companies. While these alternative energy businesses and others are poised to benefit significantly from President Biden's recently enacted infrastructure act, the stock market's antennae are acutely sensitive to potential headwinds. It's no wonder, therefore, that the new lockdowns in Europe and the potential for similar domestic responses to this latest threat are rattling investors.

Plug Power has articulated a keen interest in expanding its footprint in green hydrogen production. Two months ago, for example, it announced a plan to develop a facility in Fresno, California, capable of producing 30 tons of green hydrogen daily -- its latest move en route to a long-term goal of producing 500 tons of green hydrogen per day by 2025.

Now, investors are surely concerned that U.S. lockdowns could result in delays in the development of those hydrogen-production facilities.

Plug Power's stock has soared by more than 2,200% over the past three years as bulls have put their faith in management's ambitious growth targets -- among them, its forecast that it will generate revenue of $3 billion in 2025. A return to lockdowns could jeopardize the company's ability to achieve that sort of growth.

Although Bloom Energy hasn't publicized a specific green hydrogen production target like Plug Power, it is committed to expanding beyond its bread-and-butter solid oxide fuel cells and into hydrogen fuel cells. In the recently completed quarter, the company announced that its Bloom Electrolyzer (for hydrogen fuel cells) and Hydrogen Energy Server will be available to customers beginning in 2022.

Those who trimmed -- or exited -- positions in Nikola Friday were likely selling in sympathy with Plug Power and Bloom Energy. Nikola is committed to manufacturing hydrogen-powered vehicles, and if the requisite hydrogen infrastructure isn't in place to support them, customers will be reluctant to choose Nikola's offerings over other electric-powered or internal-combustion vehicles.

Now what

Growth stocks like Plug Power, Nikola, and Bloom Energy can be extremely sensitive to market volatility, and on Friday, they exhibited that sensitivity. Those who were bullish about the hydrogen economy's growth before today, however, shouldn't jump ship now. These stocks' declines seem like an overreaction to the day's news. On the other hand, plenty of risks remain for hydrogen-related companies. Investors should be cognizant of those risks whether they're holding onto shares they already own or considering opening a position in one of these companies in the future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.