Shares of Plug Power (PLUG 1.26%) plunged 63.6% in 2023, according to data provided by S&P Global Market Intelligence. And year to date in 2024, the stock has dropped by another 20%, leaving the hydrogen stock down by a staggering 78% over the past 12 months.
Although Plug Power sealed several deals in 2023, its operational performance consistently failed to meet investors' expectations. With the company struggling to stay afloat, Plug Power stock is heading even lower.
When Plug Power spooked investors
When Plug Power announced its full numbers for 2022 in early March last year, management was confident that it would generate $1.4 billion in revenue in 2023 with a gross margin of 10%. For 2024, the company forecast that it would deliver a gross margin of 25% on sales of $2.1 billion.
Here's where things stand right now: In the first three quarters of 2023, Plug Power generated just about $669 million in revenue. Even more alarming, Plug Power reported a gross loss of $285.5 million for the period -- 2.5 times as much as it lost in the prior-year period. So forget a 10% gross margin -- Plug Power's gross margin is deep in the red for 2023 so far, and there's little chance the company's top line will cross the $1 billion mark, let alone reach the $1.4 billion it guided for.
Looking at those numbers, one can't blame the market for punishing Plug Power stock throughout 2023. The company's last earnings release, in fact, was one more nail in the coffin for the stock price. Not only did it report an insignificant 5% growth in revenue and a negative gross margin of 69% for Q3, but it confirmed it needed more cash to run its business and fund growth. The company is, therefore, pursuing several options to raise funds, including taking on debt and selling more shares.
Those moves, however, may not be enough to keep Plug Power afloat. The company itself warned investors so, hinting that it might not survive at all.
Yes, you read that right.
In its quarterly regulatory filing with the Securities and Exchange Commission, Plug Power stated that "its existing cash and available for sale and equity securities will not be sufficient to fund its operations through the next twelve months," and that raises "substantial doubt about the company's ability to continue as a going concern."
Can Plug Power stock revive in 2024?
Plug Power is the front-runner in hydrogen fuel cells, building giga factories, and aiming for leadership in the green hydrogen space by 2025 in terms of capacity. It also sealed multiple sales deals last year, especially for electrolyzers. However, none of that matters if the company is deep in losses and doesn't have enough money to run its operations for even a year or so.
That's unfortunately the situation at Plug Power now, which makes it even harder for investors to believe a management team that has been dishing out lofty long-term financial goals despite all the problems. At its annual event in October, for example, management reiterated its forecast that Plug Power is on track to generate about $6 billion in revenue with a gross margin of 32% by 2027, and can grow those numbers to $20 billion and 35%, respectively, by 2030.
Plug could still pull through, but at what cost? If the company keeps issuing debt and selling shares to run its business and build factories, investors shouldn't expect the stock to earn them much.
