Plug Power (PLUG -9.89%) has been a deeply disappointing investment over the decades. Shares of the hydrogen company have cratered a staggering 99% since its initial public offering in 1999.
Plug Power's poor performance is due to persistent losses that forced it to issue more stock to fund its operations and expansion. Even so, the company expects improvements. Here's where the hydrogen stock believes it will be in three years.
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A look at the Plug Power of 2025
Plug Power is a pioneer in the hydrogen market, creating the first commercially viable market for hydrogen fuel cell technology. It has since deployed more than 69,000 fuel cell systems and over 250 fueling stations. It has the largest hydrogen network in the world, and it's the top global buyer of hydrogen.
The company's hydrogen investments have not paid off. Plug continues to burn through cash to fund its operations and expansion. In the first quarter, it generated $133.7 million in revenue, up from $120.3 million the previous year, but its total cost of revenue was $207.5 million, resulting in a gross margin of negative-55%. Including other expenses, the net loss was $196.7 million. In total, the company burned through $152.1 million in cash during the period, dropping its cash position to $295.8 million by the end of the first quarter. At the current burn rate, Plug Power can operate for two more quarters.
This cash shortage forced Plug Power to boost its liquidity. In January, it closed a $1.6 billion loan guarantee with the U.S. Department of Energy for up to six hydrogen projects, and in May, it secured a $525 million credit facility with Yorkville Advisors. Following these financings, Plug Power does not anticipate any additional dilutive stock offerings this year, except for the $280 million sold in March.
A glimpse at where Plug Power expects to be in 2028
Plug Power expects to turn the corner on its profitability over the next three years. The company believes 2025 will be a transformational year on its path toward profitability. A big driver is its Project Quantum Leap, an initiative targeting over $200 million in annual savings. This plan, along with the company's anticipated sales growth, positions it to exit the year with a positive gross margin run rate.
Plug Power expects to continue improving its profitability over the next few years. It aims to achieve positive net operating income by the end of 2027 and reach overall profitability as it exits 2028.
The company's growth strategy drives that optimistic view. Plug Power expects to grow revenue from its energy business at a 30% compound annual rate from 2025 through 2030, driven by demand for its electrolyzer and cryogenic solutions. The company also anticipates delivering 30% annual revenue growth in its applications business.
Plug Power is starting to see this accelerating demand materialize. For example, it has signed two deals this year to supply Allied Green with electrolyzers for large-scale projects in Australia and Uzbekistan. The company expects to start delivering those electrolyzers in 2027. Meanwhile, the company signed several deals to deploy additional hydrogen fuel cell solutions with customers.
The key issue for Plug Power over the next few years is securing funding to support its operations and growth until it becomes sustainably profitable. While Plug Power does not plan to sell more stock this year, it may need to in the future, which could further weigh on its stock price.
On the road to profitability
Plug Power has consistently disappointed investors due to its lack of profitability. The company expects this to change in three years. It believes cost cuts and growth catalysts will enable it to finally become profitable by late 2028.
Despite this outlook, Plug might not be a good investment over the next three years. The company still needs to bridge the gap between its cash flow and cash needs, which it will probably do with additional dilutive stock issuances. That could keep the pressure on its stock price, making it look like an unappealing investment opportunity despite its growth potential.
