What happened
Plug Power (PLUG 3.06%) plunged this week, trading 19.4% lower as of noon Friday, according to data provided by S&P Global Market Intelligence.
If you look at the hydrogen stock's price performance chart, it is evident that much of that drop came in a single day. That was also the day it announced its quarterly numbers. And they were such that in the following days, several analysts rushed to downgrade their ratings and price targets on Plug Power stock.
So what
After Plug Power hugely underdelivered in 2022, I was afraid that the company will not be able to stick with its guidance of nearly doubling its revenue to $1.4 billion this year and turning gross-profit positive.
On May 9, Plug Power reported 49% year-over-year growth in its first-quarter revenue, but revised its outlook for 2023 with a revenue projection of $1.2 billion to $1.4 billion. And while earlier Plug Power said it expects to generate a gross margin of 10% this year, it put out a gross profit forecast of $50 million and $140 million this week. It's worth noting that Plug Power reported a gross loss of $69 million in Q1.
Here's what that means: Although Plug Power still expects to grow revenue at a torrid pace this year and finally generate a gross profit, investors aren't sure how it'll get there. I get that: A high gross loss in the first quarter is bound to sow a seed of doubt in their minds. Moreover, Plug Power hugely disappointed investors last year when it ended it with 40% revenue growth against the 80% growth it originally projected.
NASDAQ: PLUG
Key Data Points
Analysts who were expecting a rock-solid year from the hydrogen fuel cell company have toned down their expectations as well. Here are just some of the analysts who slashed Plug Power stock's price target in the past couple of days:
- RBC Capital analyst Chris Dendrinos: $12 per share from $17 a share.
- BMO Capital analyst Ameet Thakkar: $7.5 per share from $10 a share.
- Piper Sandler analyst Kashy Harrison: $10 a share from $12 per share.
- Truist analyst Jordan Levy: $9 a share from $11 per share.
- Canaccord analyst George Gianarikas: $10 per share from $15 a share.
- Susquehanna analyst Biju Perincheril: $15 per share from $22 a share.
Now what
Plug Power is a pioneer in green hydrogen, but management's execution so far has left much to be desired. Investors are frustrated with the company's inability to convert higher sales into profits, and until the company can show a path to profitability, its stock will likely remain under pressure.
