What happened
After crashing by double digits on Monday, Plug Power (PLUG -4.36%) is down another 7.8% today as of 11:40 a.m. ET. The hydrogen fuel cell stock is now trading at levels last seen in 2020.
Shares of Plug Power have already been under pressure for some days now after rival Bloom Energy delivered a bummer of a quarter last week. Plug Power hugely missed earnings estimates, but what made matters worse is that it came amid a market sell-off. The timing couldn't have been any worse.
So what
Here are the key numbers from Plug Power's first-quarter earnings report (all changes year over year):
- Revenue: Up 96% to $140.8 million.
- Operating loss: Up 188% to $139 million.
- Net loss: Up 158% to $156.5 million.
You'd have guessed by now why shares tanked: The company's revenue growth met analysts' estimates, but not many expected to see such a big loss.
Image source: Getty Images.
This morning, at least a couple of analysts slashed their price targets on Plug Power after its earnings miss, including Eric Stine from Craig-Hallum, who cut the stock's price target to $31 a share from $49, and Biju Perincheril from Susquehanna, who cut the target to $30 from $33.
The bad news, however, ends there.
Now what
Plug Power blamed higher costs on rising natural gas prices that hurt its margins on hydrogen. Prices of fossil fuels have skyrocketed since conflict broke out between Russia and Ukraine. The company expects the margin pressures to continue through the second quarter, but it also expects to cut other costs like logistics to offset fuel costs to some extent.
Importantly, Plug Power remains confident it can generate $3 billion in annual revenue and a 17% operating margin by 2025, driven primarily by cost reduction. In its electrolyzer business, for example, Plug Power expects to reduce cost by 60% to 70% by 2025 as its plant in Rochester, New York, scales up capacity. It is the largest fuel cell and electrolyzer factory in the world. Electrolyzer devices are used to produce hydrogen.
Plug Power also reiterated its 2022 revenue guidance of $900 million to $925 million, or roughly 80% growth over 2021.
Remember: Plug Power is a growth stock in an industry that's still in its nascent stage. Turning profitable isn't easy for such companies. What matters is whether Plug Power's top line is growing, and the company is leaving no room for complaints there.
