What happened
Shares of hydrogen company Plug Power (PLUG -1.25%) fell 4% on Friday, losing some of the momentum it had earlier in the week. Shares ended the week down 9%, and that's concerning given some big announcements.
So what
Yesterday, Plug Power announced a deal with SK Plug Hyverse, Coupang Fulfillment Services, and Kendall Square Asset Management to build "eco-friendly hydrogen fulfillment centers in South Korea. That followed an announcement in late August to provide Amazon (Nasdaq: AMZN) with green hydrogen starting in 2025.
These all sound like great developments, so why is the stock down today? One reason is that Plug Power gave Amazon warrants to acquire 16 million shares, continuing Amazon's trend of getting warrants as an incentive to sign supply agreements, which shows Plug Power's weak negotiating position.
Another challenge today was a fairly strong jobs report that investors think will lead the Federal Reserve to raise rates at a quicker pace during the rest of 2022 to cool off inflation. Higher rates are a headwind to large capital investments Plug Power's customers need to make, so that could be impacting the stock.
Now what
The deals Plug Power is signing sound impressive, but the company needs to prove that it can make money on them long-term. The company first signed a deal with Amazon in 2016, and while revenue has grown since then, the company hasn't been profitable. It's not clear that any of these deals will change that, and until I see profitability from Plug Power, I'm staying out of the stock.
