What happened
Plug Power (PLUG -0.36%) stock's rebound in February may have led investors to expect better days ahead, but that doesn't seem to be the case just yet. The fuel cell stock rallied 15.6% last month, according to data provided by S&P Global Market Intelligence, but is under some pressure so far this month. So what's with this roller-coaster ride and where's Plug Power headed?
So what
The crash in growth stocks and the stalling of President Joe Biden's Build Back Better bill that proposed billion of dollars in incentives on renewable energy hit Plug Power shares hard earlier this year. Although Plug Power guided for $900 million to $925 million in revenue in 2022 and reiterated its 2025 outlook of $3 billion in sales and 17% in operating margin, the market expected even more.
Plug Power shares, though, got a lift mid-February as peers started to report numbers, starting with Bloom Energy (BE). Bloom Energy surprised Wall Street with 37% growth in fourth-quarter revenue and guidance of 13% to 18% growth for 2022 and 30% to 35% growth over the next 10 years. Most importantly, Bloom Energy expects to generate positive cash from operations in 2022.
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Bloom Energy's numbers, especially the prospect of the company generating positive cash flow, lifted investor hopes for Plug Power, as its earnings were around the corner and the company was signing new deals regularly. In February, for example, Plug Power signed a collaboration with an Atlas Copco company and a heat exchangers company to jointly develop hydrogen liquefaction plants for use by Plug Power and third parties. The deal came just days after Plug Power acquired Joule Processing for $160 million to use its cryogenic process technology in hydrogen liquefiers to potentially reduce the cost of liquified hydrogen by 25%.
Now what
Plug Power announced its fourth-quarter and full-year 2021 numbers on March 2, and it managed to impress the market with its revenue for the quarter and year hitting record highs. The company also projected a solid 80% growth in revenue in 2022 and said it is confident it will hit $3 billion in sales by 2025.
Plug Power's numbers looked impressive at first blush and the market bid the stock higher after the announcement, but the euphoria failed to last as investors took note of the company's mounting losses and negative cash flows. At least two analysts also lowered their price targets on Plug Power, with analyst Jed Dorsheimer at Canaccord Genuity pegging Plug Power to be worth $21 share and RBC Capital analyst Joseph Spak giving the stock a price target of $33 a share.
Plug Power stock is volatile, and that's how it'll likely remain. The company might be a first mover in the hydrogen and fuel cell industry, but the industry itself is still in its nascent stage. That said, the Russia-Ukraine conflict and surging energy prices have renewed focus on alternative fuels, and that could work out in Plug Power's favor in the long run as green hydrogen and fuel-cell technology gathers steam.
