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

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

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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.

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