For a company's shares to more than triple in less than a year, the stars really need to align. Yet so far in 2014, Plug Power has had its moment to shine with shares are up an astounding 271%. If you've never heard of Plug Power, that's OK, because this time last year it was barely on anyone's radar. Shares traded for less than $1, and the company had a market capitalization of less than $50 million. Today, that very same company is sitting at a market value just above $1 billion.

How in the heck can a company grow that quickly? It took a lot of help from the rumor mills at Wall Street. Let's take a look at the recipe that sent shares of Plug Power on this astronomical ride.

Add two cups promising energy technology, one cup major deal signing, sprinkle in speculators, and stir vigorously

Plug Power's Product, say that three times fast. Source: Plug Power Investor Presentation.

Let's get started on what exactly Plug Power does. It designs and manufactures modules that replace traditional battery systems in electrically powered equipment such as warehouse forklifts. Sounds pretty boring, right? The reason it has garnered so much attention, though, is because the guts of that module contain a hydrogen-powered fuel cell. Some might call this technology the white whale of the energy world because of its potential benefits, but companies have been trying for decades to develop a fuel cell that would be commercially viable without much success.

Then, there was a spark that got the fuel cell stock mania started. During a business update conference call, Plug Power CEO Andy Marsh announced the company was on the precipice of signing a major deal that would represent a huge uptick in the company's current business. This was followed by a series of corporate announcements that suggested fuel cells were looking more and more like a viable energy storage method that could potentially replace both conventional batteries and, potentially, combustion engines. The biggest of those deals was one with Wal-Mart that totaled more than 1,700 of Plug's fuel cell systems, which, at the time was 44% more than all of the units it has sold to its four largest customers to date. 

These deals and announcements -- along with a ton of media coverage -- sent speculators and day traders into a frenzy that can best be described as throwing a bucket of bait into a tank of starving sharks. In a single day following a business update call where Plug announced a couple more deals, shares shot up a spectacular 91%. What was even more astounding was the rate at which those shares traded hands. Based on the total trading volume and the share count for the company, almost every single share in Plug Power changed hands twice in a single day. Things have settled down a bit since. But even as a company with a market value of $1 billion, the slightest whiff of promising deal news or another share issuance can still send shares on a wild ride.

PLUG data by YCharts.

Let rest until sales numbers improve

Promise has never been in short supply at Plug Power, but the one thing that has lacked over the years has been performance. This was not the first time Plug Power's shares have skyrocketed. It happened once right after its IPO in early 2000, when shares were worth almost $1,500(!), then there were big pops again in 2002, 2004, and 2011. The reason all of these share explosions petered out was because there was no growth in sales or profitability to follow. From 2000 to 2013, annual revenue at Plug Power has increased by less than $20 million, total sales in 2013 were a rather paltry $26 million, and the company recorded another net loss in excess of $100 million.

However, this past quarter was the first time Plug actually started to show signs of life as a business and not just the speculative dreams of investors. Sales for the most recent quarter came in at $17 million -- two times the same quarter year over year -- and it was the very first time in its 14-year history that its costs of goods sold were less than its revenue, which actually gives some justification to the company's astronomical valuation.

The next big step for the company will be to turn those sales into some semblance of profitability. If this quarter's products sales figures can be repeated on a regular basis, it would put annual product revenues just over $50 million. According to the company's most recent investor presentation, this level of sales should equate to a positive EBITDA figure, and Plug should be there this quarter.

Source: Plug Power Investor Presentation.

However, if we project the company's most recent quarter on an annualized basis, it did not give any indication that it's closer to reaching break-even on an EBITDA basis. 

Plug Power Sales and Costs  Q2 2014 (in millions) On an Annualized Basis
Product Sales 12.58 50.31
Cost of Product Sales 10.45 41.78
Research & Development expenses* 1.02 4.08
Sales, General and Administrative expenses*  3.53 14.11
EBITDA (2.42) (9.66)

*R&D and SG&A costs presented are 73% of total expenses because product sales represented 73% of total revenue for the quarter. Source: Company quarterly earnings release.

This also doesn't count its product service and research and development contract revenue streams, both of which still cost more than the revenue they currently bring in. So, unless the company can find significant cost reductions in this quarter, it's unlikely it will hit this break-even point.

What a Fool believes

It may be to early to say "it's different this time" with the huge run-up in Plug Power's shares (slight side note: Does anyone else get a shiver down their back when they hear those words together?). However, the big boost in sales is the first sign, well, ever that Plug Power might actually become more than just an entity that feeds off of share issuances and research grants. 

The chances that Plug Power can sustain this kind of share price appreciation are close to nil. Many investors have made huge bets on future sales growth and potential revenue, and today, shares trade at an enterprise value to total revenue of 29.7 times. I can't say with 100% certainty that this kind of valuation is unwarranted, but it sure is a big premium to pay for shares.