After bounding higher in March, shares of fuel cell specialist Plug Power (PLUG 0.40%) reversed course and headed lower in April, falling 26.5% -- far sharper than the 8.8% loss in the S&P 500, according to data from S&P Global Market Intelligence.
For hydrogen investors hoping the fuel cell stock could power growth in their portfolios, the precipitous decline in Plug Power's stock may have been shocking -- especially since the company didn't report any especially egregious news last month. But that's not to say there isn't an explanation for the stock's fall.
Working to occupy an increasingly more prominent position in the hydrogen economy, Plug Power is positioning itself to grow significantly in the coming years. While the company reported 2021 sales of $502 million, it's targeting revenue of $3 billion in 2025. Investors last month, however, exercised caution with more speculative stocks, looking to fortify their holdings with more conservative options. Consistently failing to generate profits and positive cash flows, Plug Power didn't seem to meet that need last month, however.
Besides the general bearish sentiment in the markets, there were other catalysts for the stock's decline. For one, Plug Power announced in mid-April that it was adding two members to its board of directors. In and of itself, news that a company is growing the size of its board doesn't seem to be disastrous. In this case, though, the announcement came amid news of strife with Twitter's board of directors, and it seems like investors may have simply overreacted.
Another factor behind the stock's drop was news that Plug Power had entered into an electrolyzer supply agreement with MOL Group. While management lauded the deal, investors were left scratching their heads, wondering if there would be any positive material effect to the company's financials. Plug Power excels at announcing major (and minor) deals with customers -- deals that in many cases help the company to grow revenue but fail to contribute as significantly on the bottom line. It seems that investors are growing impatient with deals short of financial details of this kind.
It remains to be seen if the showers that dampened investors' spirits in April will result in the stock flowering in May, but so far, it doesn't seem too promising. As of this writing, shares of Plug Power have tumbled nearly 17% so far this month, and it seems quite possible that shares will continue to slide even more in the coming weeks.