What happened
Hydrogen-related stocks tumbled early this morning before a turnaround took them into positive territory. The moves of Plug Power (PLUG -3.51%), Nikola (NKLA -0.71%), and Bloom Energy (BE -1.54%) outpaced the overall market on both the downside and upside. After each dropped more than 5% early in the session, all three had turned solidly positive as of 11:29 a.m. ET:
- Plug Power was up 5%.
- Nikola was up 10.3%.
- Bloom Energy was up 5.3%.
So what
The initial negative reaction came after CNBC highlighted some comments made by Tesla CEO Elon Musk earlier this week at the Financial Times Future of the Car summit. Musk has been known to discredit hydrogen as a fuel option that could help the world transition to green energy. But this week the electric vehicle trailblazer called hydrogen, "the most dumb thing I could possibly imagine for energy storage."
Image source: Getty Images.
Now what
Plug Power has committed to growing the use of green hydrogen, which is produced using renewable energy sources for the electrolysis process. The company is building out a hydrogen production network across the U.S. for what it believes will potentially become a $10 trillion industry.
One recent example of a use case for Plug came in a new agreement with giant retailer Walmart. The plan calls for Walmart to have an option to receive as much as 20 tons per day of liquid green hydrogen to help power its material handling forklifts in its U.S. distribution and fulfillment centers.
Nikola is also counting on growing the infrastructure needed for using hydrogen as a transportation fuel for some of its electric heavy trucks. Nikola is producing battery electric trucks as well.
But Musk was critical of the use of hydrogen, saying that "gigantic tanks" would be needed for liquid hydrogen, and gaseous hydrogen would take even larger storage tanks. Musk seemingly has the clout to affect investor's thoughts on the future of hydrogen. That likely contributed to the initial drop in the sector this morning.
But as the market recovered today, and perhaps investors looked at what these companies are already doing as they grow their hydrogen businesses, the stocks also recovered from the early declines. It remains to be seen whether these companies can turn their plans into sustainably profitable businesses. Apparently Musk doesn't think so.
