Plug Power (PLUG 2.97%) stock's disastrous performance from 2024 is continuing into 2025. After plunging by 53% last year, shares of the hydrogen fuel cell maker slumped by another 12.7% in January, according to data provided by S&P Global Market Intelligence.
From a business standpoint, January was a huge month for Plug Power as it struck a "monumental" deal and closed a much-needed loan agreement with the Department of Energy. Some recent events, however, have spooked investors with regard to the hydrogen stock.
Why investors dumped Plug Power stock
In mid-January, Plug Power announced a deal to supply 3 gigawatts (GW) of electrolyzer capacity to Australian company Allied Green Ammonia to power a solar plant that will produce green ammonia. It's a huge deal given the electrolyzer capacity, and important too, considering that Plug Power is banking heavily on electrolyzers to drive its revenue growth in the coming years.
Around the same time, Plug Power closed a $1.66 billion loan guarantee from the Department of Energy. The loan guarantee was a huge relief as Plug Power is consistently burning cash, so much so that management even issued a going concern warning in late 2023. Plug Power will use the funding from those loans to construct up to six green hydrogen plants in the U.S.
NASDAQ: PLUG
Key Data Points
Despite the two positive developments, investors' hopes were nipped in the bud after President Trump issued a barrage of executive orders on his first day in office, including one that froze the release of the remaining government funding for green hydrogen projects that won billions of dollars in awards under the Biden administration. Hydrogen stocks, including Plug Power, plunged in the wake of Trump's orders.
That sell-off deepened after Chinese artificial intelligence (AI) company DeepSeek rattled the tech industry with an open-source large language model (LLM) that it asserted it had developed at a small fraction of the cost of similar models such as ChatGPT.
Plug Power may not be an AI company, but new AI data centers are expected to drive heavy demand for clean, stable power that technologies like hydrogen fuel cells can provide. Investors fear that DeepSeek could presage a shift to LLMs that require significantly less processing power, which would in turn lead to a slowdown in the build-out of U.S. data center infrastructure. That would throttle a key growth market for Plug Power.
Can Plug Power stock recover in 2025?
Investors and analysts alike are turning cautious about Plug Power. Last month, for instance, Seaport Global Securities analyst Tom Curran downgraded his rating on the hydrogen stock to a sell and gave them a price target of $1 per share. That's almost 50% lower than Plug Power's stock price as of the time of this writing.
Curran highlighted the recent unfavorable developments in two of Plug Power's most important markets, North America and Europe, focusing particularly on Trump's executive orders, which could put the company's federal loan guarantee at risk.
In addition, management's revised guidance is for slower revenue growth than its earlier projections, and it remains to be seen whether the company can achieve a positive gross margin by the end of 2025 as it expects. Long story short, Plug Power stock's path to recovery may not become visible anytime soon.
