Plug Power (PLUG 1.26%) stock crashed after its first-quarter numbers came out Tuesday morning. The hydrogen stock logged one of its biggest intraday falls in recent months, hit a 52-week low, and has now lost half its value in just six months.

The same story has played out at Plug Power for several years now: Its revenue continues to grow, and so do its losses. The first quarter was no different, so no surprises there. In fact, the hydrogen fuel cell specialist even said it "reaffirmed" its outlook for 2023, which means the company could finally turn a gross profit this year.

Why, then, did Plug Power stock fall so sharply, and could this be an opportunity to buy?

A painful wait  

Plug Power's revenue surged 49% year over year in Q1. Yet, the company reported a negative gross margin of 33% versus a negative gross margin of 25% in Q1 2022.

That's where Plug Power's problem lies.

Plug Power isn't a young company: It shipped its first fuel-cell system for stationary power in 1999, which was also the year the company went public. Over the years, Plug Power has made several acquisitions, entered the European market, and grown its revenue from only $11.8 million in 2002 to nearly $700 million in 2022.

Yet, there's no sign of profitability yet, and it's been a painful wait for investors. Plug Power's net loss rose sharply to $724 million in 2022. In the first quarter, the company reported a net loss of $207 million, up 31% year over year and missing analysts' estimates by a big margin. The company is also burning through cash rapidly. It ended the quarter with just $475 million in cash and cash equivalents, down from the $690 million as of Dec. 31.

But Plug Power still expects to double its revenue this year and even generate gross profit. That might seem impressive, but it's hard for investors to trust a company that hugely overpromised and underdelivered in 2022 when it grew its revenue by only 40% against its original guidance of 80%.

Above all, although Plug Power says it has "reaffirmed" its outlook for 2023, that's not entirely true.

The key numbers investors should know

Last quarter, Plug Power projected revenue of $1.4 billion and a gross margin of 10% for 2023. Things have changed a bit since then, as the company has now added a range to its outlook. Here's what its guidance for 2023 looks like now:

  • Revenue: Between $1.2 billion and $1.4 billion.
  • Gross profit: Between $50 million and $140 million.

So with just one full quarter of the year behind it, Plug Power is already suggesting it may not grow as much in 2023 as it originally expected to. Investors, of course, don't want an encore of 2022, and they're dumping the stock instead of giving management another chance.

To be fair, Plug Power could still clock high revenue growth this year, but the biggest question is profit. Given where the company stands now, it's hard to see how it'll turn a gross profit this year. Management believes it's possible as the company scales up its electrolyzer business and brings its green hydrogen plants online this year. Plug Power also expects to deploy its first stationary power units for electric vehicles in the second quarter.

All of this requires a lot of money though, as hydrogen fuel-cell infrastructure is a capital-intensive business, and Plug Power is already evaluating funding options like loans. The company thankfully doesn't have a lot of long-term debt on its books yet, but high costs are already eating into its bottom line and cash, and that's something Plug Power needs to address quickly.

Plug Power is a risky stock

Plug Power stock jumped more than 1,000% in 2020 after it announced multiple deals. The stock's now trading at a fraction of its high of 2021 despite growing its revenue steadily since.

That steep fall may make Plug Power look enticing at current prices, as even the first signs of profitability could send the stock soaring. But investors should be careful: Going by Plug Power's history, pressing the buy button before the company shows firm signs of turning its losses into profits could lead to disappointment.