Plug Power (PLUG +1.14%) is a story stock. Shares of this hydrogen energy producer reached a price of $1,497.50 in the early 2000s. That, however, has to be taken with a grain of salt, because it reflects a 1-for-10 reverse stock split, meaning that the high price at the time was around $150 per share.
The current price of a share of Plug Power is roughly $2, which adjusted for the 1-for-10 reverse split, would put the price at just $0.20 compared to the $150 price just noted. Is it worth buying Plug Power after such a massive fall from grace? Let's find out.
What does Plug Power do?
Plug Power describes its business as "building an end-to-end green hydrogen ecosystem, from production, storage and delivery to energy generation, to help its customers meet their business goals and decarbonize the economy." To simplify that, the company makes hydrogen fuel cells, which turn hydrogen into energy and electrolyzers, which turn water into the hydrogen that is used in its fuel cells.
Image source: Getty Images.
This is very interesting technology, because the main byproducts of using hydrogen for power are heat and water. That's very different from carbon fuels, which release noxious fumes and greenhouse gases. There are some very attractive applications for hydrogen fuel cells. For example, forklifts used inside of a warehouse would suddenly become much safer from a health point of view if they used hydrogen. And that is a key market. But there are other industries trying hydrogen out, too, including trucking.
From a purely environmental standpoint, Plug Power's business is very attractive. But Wall Street doesn't focus on just this aspect of a business, or at least not for long. Back when the company held its initial public offering (IPO) the opportunity for hydrogen was what drove the stock higher.
But as often happens with story stocks, the company's real-world results didn't live up to the hype. The stock fell so much from its post-IPO peak that a 1-for-10 reverse split was needed to keep it from being delisted. This often occurs when a stock falls below $1 a share, which puts it into penny stock land. All but the most aggressive investors should avoid penny stocks.
The big stock drop and reverse stock split are not good signs. And after a massive rally in 2020 flamed out, the stock remains moribund. Some investors might see that as an opportunity to get in on the ground floor of an attractive clean energy business. More conservative types might see that as an indication of the risk of investing in Plug Power's story-driven stock.
The big problem for Plug Power
The truth is, Plug Power does have very interesting technology to offer the world. But that isn't enough. Look at the infrastructure behind oil and you'll see the biggest issue that Plug Power has to face down.
The energy industry has to drill for oil, transport it to where it gets processed, process it into gasoline (among other things), then transport the gasoline to gas stations, and then customers have to go to the gas station to fuel their vehicles. That's a massive interconnected business setup with a huge pre-existing customer base and hydrogen just doesn't come anywhere near matching it.
So potential Plug Power customers have to agree to deal with a fuel that is less readily available and a technology that is less universally supported. That's a big ask and requires a business that is willing to take risks and, frankly, spend more to be environmentally conscious. The higher cost of using hydrogen compared to other energy options is the second big problem, but that is at least partly a reflection of the scale issue.
NASDAQ: PLUG
Key Data Points
It should be little wonder, then, that Plug Power is a money-losing business. And given the spending that it still needs to make with research and development and the buildout of the hydrogen infrastructure system, it is likely to remain mired in red ink for years to come. Even good news is still kind of bad news here -- the company's gross profit improved significantly in the second quarter of 2025, from -92% last year to -31% this year.
Tread carefully with Plug Power
Plug Power has an interesting story, but right now that's the major selling point for the stock. Unless you buy into that story in a big way, you should probably wait on the sidelines. If Plug Power, and hydrogen more broadly, can gain more traction as a business, it might be worth buying the stock.
But most investors will be better off missing out on some potential gains than trying to get in early. If Plug Power's hydrogen story doesn't pan out as hoped, you might end up losing your shirt. That is, sadly, what appears to have happened to a lot of investors so far with this story stock.
