Many investors who at one time had high expectations of growth for hydrogen fuel cell company Plug Power (PLUG 4.02%) didn't stick around to see its multi-year growth plan play out. The company's stock traded over $70 per share at its peak in early 2021, valuing the alternative energy name with a market cap of about $36 billion.
That valuation has now been more than cut in half with the stock closing yesterday's trading at $25.55 per share. But the stock is popping today, as Plug's hydrogen growth investments are beginning to pay off. The company announced today it has a new agreement with Walmart to supply the retailer with up to 20 tons of green hydrogen per day to fuel the material-handling trucks it uses at fulfillment and distribution centers.
Image source: Plug Power.
Plug has been making investments steadily over the past year to build green hydrogen production facilities that it hopes will supply 1,000 tons per day (TPD) globally by 2028. In the U.S. alone, the company has announced plans for the largest facility of its kind on the West Coast along with others in Georgia, New York, and Tennessee. Plug expects its domestic plants to produce 500 TPD by 2025.
The company has also been on a parallel path to support and build out the hydrogen-fuel infrastructure needed to grow the use of hydrogen in the transportation sector. Those efforts include a joint venture with French automaker Renault and another to expand the use of green hydrogen in Spain and Portugal. It also has an agreement with Edison Motors, a Korean electric vehicle maker, to produce hydrogen-fueled city buses.
Many investors have given up on Plug Power as it has struggled to convert growing revenue into a profitable business. The company expects to generate at least $900 million in sales in 2022, with a goal to reach $3 billion by 2025. Today's announced agreement with Walmart will help contribute to that growth. It also helps justify the capital spent to build out the infrastructure needed to grow the use of hydrogen as a fuel. Investors reacted by boosting the shares today.
Those with a long-term time horizon could see this as a sign that there will be new agreements to come, with a big name like Walmart leading the way. For those who believe alternative energy supplies will continue to grow, Plug Power may now be a worthwhile investment.