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Plug Power puts a lot of hope in GenDrive vehicle fuel cells turning its business around. That hope may be misplaced. Image source: Plug Power.

For the second day in a row, hydrogen fuel-cell pioneer Plug Power (NASDAQ:PLUG) took a tumble on Tuesday. Between losing 14% of its market cap on Monday and losing a further 19% on Tuesday, Plug shares are now worth 31% less than they were worth at the end of last week.

Of course, that was before the company had reported earnings.

The news
Plug Power released its earnings results bright and early Monday morning, and as you have probably guessed by now, the news was not good. For fiscal Q3 2015, the company reported:

  • A 46% increase in the number of GenDrive vehicle fuel cell units producing revenue, implying growth in both unit count and revenue produced by the units already in service.
  • Quarterly revenue of $31.4 million, of which 57% came from product sales and the balance from services. This was 58% greater revenue than the company collected in Q3 of last year.
  • But the cost of revenue also equaled $31.4 million -- implying a companywide gross margin of precisely 0%.
  • Operating costs, meanwhile, surged 71%, much faster than revenue.
  • And this pushed the company into a $0.06 per-share loss -- 50% worse than last year's loss.

Now, management insists that all of the above was "in line with 2015 guidance." Perhaps anticipating that he would catch flak for the results, CEO Andy Marsh was quick to point out that Plug's revenues are now 65% of the way toward the goal the company laid out back in January. (Of course, the year is 75% over.) Bookings are 83% of the way toward Plug's goal for the year; installations, 70%; new customers, 83%; and gross margins for GenDrive "ahead of schedule."

So when Marsh says the company is more or less on schedule, there's something to that statement. But even so, the headline numbers that Plug reported certainly weren't what investors were hoping Plug would report. As my fellow Fool Travis Hoium pointed out on Monday, analysts who follow the company had told investors to expect $30.7 million in revenue, and only a $0.05-per-share loss.

Paint as happy a face on the news as you like -- the fact remains that Plug missed both those targets.

What to do now
With Plug stock already down 31% since earnings, investors may be thinking that the worst is over and that it's safe to jump back into the stock today. To these folks, I'd just like to point out that while Plug Power stock costs less than it did just before earnings, it costs more than it did back at the beginning of October. So any illusion of seeing the stock become "cheap" post-earnings is just that -- an illusion. I'd argue that rather than offering investors a bargain, Plug Power stock today is just an accident waiting to happen (to new investors). Here's why.

Since its founding in 1997, Plug Power has lost money every year of its life (according to data from S&P Capital IQ). Never once has Plug Power generated positive cash from operations, much less free cash flow. And its most recent results -- $50 million in cash burned over the past 12 months -- are among the worst we've ever seen.

Anyone who expects a company that's posted 18 straight years of losses and value destruction to suddenly turn around and become a profitable enterprise is, quite simply, dreaming.

Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 299 out of more than 75,000 rated members.

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