Green hydrogen -- hydrogen generated by renewable energy or from low-carbon power -- is an emerging technology with the potential to grow into a massive market opportunity. Plug Power (PLUG 7.61%) is one company leading the green hydrogen charge.

Plug Power has delivered solid returns for investors despite never turning a profit in over two decades as a publicly traded company. More recently, the returns have increased. If you invested $500 in Plug Power stock at the start of 2019, that investment would be worth $4,278 today. That's an eight-fold return and it crushes the S&P 500's gain in the same period.

However, those returns also came with enough volatility to make the average investor's stomach churn. In early 2021, your $500 investment would have turned into as much as $29,510. But the stock declined dramatically since then.

To understand the volatility, let's examine the company, its growth opportunities, and the potential drawbacks of investing in Plug Power.

PLUG Total Return Level Chart

PLUG Total Return Level data by YCharts

Plug Power is a top player in green hydrogen

Plug Power is a leading operator in the hydrogen fuel cell industry. The company created the first commercially viable market for hydrogen fuel cell technology. It's building on its end-to-end hydrogen ecosystem, including producing, storing, transporting, and dispensing liquid green hydrogen. Its ultimate goal is to make hydrogen adoption easy so that customers can help decarbonize the economy as well as reach their green energy goals.

Its growth has been mixed. Top-line revenue increased at an impressive clip of 40% compounded annually over the last decade, thanks to strong sales of its fuel cell systems and related equipment. Despite this compelling top-line expansion, Plug Power's net income continues to plummet. Last year the company posted its largest net loss -- $724 million -- since going public.  

Plug Power's growth comes at a big cost

Plug Power invested heavily in building out its end-to-end hydrogen ecosystem. In 2023, it opened up a 350,000-square-foot fuel cell manufacturing facility in New York to support the growing demand for fuel cells. It is also investing heavily in green hydrogen generation plants in New York, Georgia, California, Texas, and Finland and plans to begin producing liquid green hydrogen this year.

These investments come at a tremendous cost to investors. Since the company failed to turn a profit, it has had to raise money through significant stock sales to fund its growth. For example, since the start of 2013, Plug Power's average diluted shares outstanding went from 38 million to over 589 million.

PLUG Average Diluted Shares Outstanding (Quarterly) Chart

PLUG Average Diluted Shares Outstanding (Quarterly) data by YCharts

For shareholders who bought Plug Power when it went public, the share dilution reduced their ownership stake by 99%, showing that the company has done a better job of telling a story about the future of hydrogen than actually making a profit.

Plug Power's green hydrogen opportunity is massive, but it has a lot of work to do to become profitable

Despite its massive amount of stock issuance, Plug Power's growth story is still compelling. One thing limiting green hydrogen at a broad scale today is the substantial up-front investment and maintenance costs, so it isn't surprising to see this new technology requiring significant capital to build out.

These investments may be worth it for Plug Power to capitalize on a massive opportunity. According to a report by Precedence Research, the global green hydrogen market size is expected to grow to $332 billion by 2032 -- a growth rate of 55% compounded annually. 

A hydrogen silo next to wind turbines and solar panels.

Image source: Getty Images.

Plug Power has delivered solid but highly volatile returns for investors since 2019. The company is making considerable investments in green hydrogen technology and has the potential to be a big player in this growing industry. However, its inability to generate a profit makes it best suited for risk-taking investors willing to tolerate the volatility in hopes that it can finally turn a profit and produce sustainable long-term gains.