Please ensure Javascript is enabled for purposes of website accessibility

Why Plug Power Inc's Shares Have Dropped 40% Since Aug. 1

By Travis Hoium - Sep 8, 2015 at 5:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This former high-flying stock has lost its luster with investors.

What: Shares of Plug Power Inc (PLUG 11.72%) have lost an incredible 40% of their value since the beginning of August. For the driver of this huge decline, investors don't need to look any further than the company's most recent earnings report.

PLUG Chart

PLUG data by YCharts.

So what: Plug Power is supposed to be a high-growth company creating the next phase of forklift transportation, and maybe even disrupting markets beyond that. So, when growth fails to meet the market's lofty expectations, even by a little bit, the stock can lose a lot of value fast.  

That's what happened after second-quarter results came out, when 39% growth to $24.0 million in revenue fell behind the market's expectation of $25.2 million in revenue. And a quarterly loss of $9.3 million didn't help ease investors' fears that the company might not be able to turn a profit in the foreseeable future.

Now what: This has always been a high-risk stock, and the risk is that growth or profitability wouldn't hit the incredibly high expectations investors put on the stock as it was rising over the past year. But the reality is that Plug Power is a long way from profitability in a fairly small market -- forklifts -- with very little technological advantage over competitors. That's a recipe for disaster when the market figures it out, which is what appears to be going on right now.

I would suggest avoiding this stock because analysts aren't even expecting a profit in 2016; investors don't know how long they'll have to wait for a potential payout from this former high-flying stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$19.06 (11.72%) $2.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.