What happened
Plug Power (PLUG +0.18%) has always been considered a speculative investment and its shares have been volatile. Shareholders have seen returns of nearly 200% over the last two years, but more recently the stock is down 50% so far in 2022.
NASDAQ: PLUG
Key Data Points
That volatility comes from investors excited about the company growing its hydrogen business, but also realizing it is not yet profitable. But some news today from a global energy company has investors feeling excited again. Plug shares rose as much as 5.7% early Wednesday, and remained up by 3.8% as of 11:08 a.m. ET.
So what
The pop came after energy giant BP announced it has agreed to acquire a 40.5% stake, and become lead operator, in the Asian Renewable Energy Hub (AREH), in Western Australia. AREH has the potential to be one of the largest renewables and green hydrogen global hubs, according to BP. The project is expected to be capable of producing about 1.6 million tons of green hydrogen annually. For perspective, Plug has been expanding its network of green hydrogen facilities, and hopes to be able to produce 1,000 tons per day globally by 2028.
Now what
While Plug's global green hydrogen aspirations are just a fraction of what this one Australian project aims to produce, BP's investment and interest brings more legitimacy to Plug Power's stated plans. Most recently, Plug announced plans to build a large-scale green hydrogen facility in Europe. It expects that plant to produce up to 12,500 tons per year at full capacity.
Plug Power investors are counting on hydrogen becoming a realistic source of energy for the transportation sector as well as other industrial uses. Plug reported a net loss of $460 million in 2021, and another $156 million in the first quarter of 2022. BP taking the lead on a more than $30 billion project focused on green hydrogen gives investors hope that Plug's investments may be the right path to profitability.
