What happened
On an overall bearish day that saw the S&P 500 and Dow Jones Industrial Average fall more than 1.8% and 1.6%, respectively, shares of Plug Power (PLUG 1.26%) took an especially heavy hit. The hydrogen and fuel cell company's stock fell 5.5% on Thursday, although shares are paring back some of the losses in after-hours trading.
With the company not releasing any news to inspire the sell-off and no analysts weighing in bearishly on the stock's prospects, it's likely that investors chose to click the sell button in response to a peer's surprisingly good first-quarter financial results.
So what
Fans of Plug Power are optimistic that the company will find a way to make its fuel cell endeavors profitable -- someday. In its time as a publicly traded company, it has succeeded at growing revenue but has failed to generate something other than a number colored red on the bottom line.
In fact, the company has failed to consistently generate even a gross profit. Most recently, Plug Power has reported gross margins of negative 28% and negative 34% in 2022 and 2021, respectively.
FuelCell Energy (FCEL 3.38%), one of Plug Power's most recognize fuel cell peers, reported something today quite contrary to what Plug Power investors have become accustomed to expecting when it reports earnings. In the first quarter of 2023, FuelCell Energy reported a gross profit of $5.2 million and gross profit margin of about 14%.
For Plug Power's investors, FuelCell Energy's gross profit success is likely a sore spot, leading them to question why peers can book a gross profit while Plug Power can't. Moreover, it might be leading them to question management's forecast that Plug Power will achieve a 10% gross margin in 2023.
Now what
Investors are jumping the gun if they're losing faith in Plug Power after seeing FuelCell Energy's recent success in growing its gross profit. Truth be told, investors should already be skeptical of Plug Power's gross profit forecast. The hydrogen company has failed to inspire confidence that it can consistently generate any semblance of profitability, so investors will want to tread carefully.
