What happened
Extending their midweek slide, shares of Plug Power (PLUG -6.95%) are continuing to tumble lower today, to the chagrin of fuel cell and hydrogen investors. While anticipation of the company's business update contributed to the stock's sell-off yesterday, investors are reacting today to the actual details of the update, in addition to pessimistic opinions echoing on Wall Street.
As of 11:07 a.m. ET, shares of Plug Power are down 7.2%.
So what
The key figure from yesterday's business update that's likely concerning investors today is the company's lower revenue expectation for 2022. Whereas management had originally expected the top line to grow 80% from 2021 to 2022, it now expects sales to grow 45% to 50% on a year-over-year basis. According to the company, the shortfall is attributable to "customer timing and broader supply chain issues."
Providing more fodder for the bears, analysts are lowering expectations for Plug Power's stock today. According to The Fly, Biju Perincheril, an analyst at Susquehanna, cut the price target to $25 from $28. Similarly, Cowen analyst Jeffrey Osborne reduced his price target on Plug's stock, lowering it to $23 from $30.
Now what
While Plug Power has consistently failed to generate profits, investors have given the company a pass in light of its strong top-line growth.
PLUG Revenue (Annual) data by YCharts.
With 2022 revenue projected to grow at a less rampant pace than previous expected, investors are likely speculating that management's overestimation will translate to another area: profitability. During yesterday's business update, for example, management forecast operating income margins of 17% and 22% in 2026 and 2030, respectively.
Plug Power may be one of the most familiar faces in fuel cells and hydrogen, but yesterday's update is just the latest indication that it's best to take management's auspicious forecasts with a grain of salt. Fortunately, fuel cell and hydrogen investors have other choices they can consider.
