Plug Power (PLUG 0.91%) stock has been a roller coaster. At times, over the past five years, shares have zoomed higher by more than 2,400%. At other times, shares have lost 90% of their value.
If you had bought $500 of Plug Power stock five years ago and held on, how much would you have today?
Plug Power as an investment
Plug Power is a hydrogen stock. Demand for hydrogen fuel is fairly low today, but in future decades, hydrogen fuel could become a staple of the global economy due to rapidly rising demand for renewable energy.
This potential outcome remains far off, and the market has gone through a severe boom-and-bust cycle with Plug Power stock based on fluctuating expectations for where hydrogen fuel demand will end up. In 2020 and 2021, for example, investor interest in renewable energy stocks rose sharply, buoyed by large government investment like $278 billion earmarked in the Inflation Reduction Act for new spending on renewables projects. Plug Power's management team rushed to boost its sales guidance, telling the market that it expected to generate $1.7 billion in sales by 2024, up from a previous estimate of $1.2 billion.
The target quickly proved overly aggressive. Sales last year, for example, were only $891 million. Its technology, meanwhile, faces steep competition. On the financial side, the company is struggling to stay solvent. It seems to be reliant on government loans to survive, such as this week's announcement that the U.S. Department of Energy was moving forward with a $1.66 billion loan.
PLUG Total Return Level data by YCharts
After this boom-and-bust cycle, how much would a $500 investment be worth today? After five years, you'd have only $732. Investing in the S&P 500 index, for comparison, would have grown $500 into about $1,000. Plug Power is a highly volatile stock with huge expectations. But so far, long-term shareholders have been left holding the bag.
