Plug Power stock surged by 13.09% on Monday, June 12th, closing at $10.37 per share. Why did PLUG stock go up so much?

The company announced that it had signed a deal to provide hydrogen fuel cells to the city of Calistoga, California. This deal is worth $11 million and is expected to generate $100 million in revenue over the next five years.

Additionally, there is increasing interest in hydrogen fuel cells as a promising technology for clean energy. Hydrogen fuel cells produce zero emissions, making them a more environmentally friendly alternative to traditional gasoline-powered vehicles.

How Good Are Plug Financials?

Plug has been on a run of late with year-over-year revenues up over the last 3 quarters by 76.3%, 83.2% and 34.4% respectively.

• Top Line Revenues: Last quarter, Plug Power generated $143.9 million in revenue and for 2022 revenues were up 39.6% vs the year prior.
• Bottom Line Profitability: In 2022, net income was negative to a large degree, and was in the red to the tune of $723 million.
• Cash flow: Levered free cash was negative by $1.2 billion.

In spite of the poor profitability and cash burn, Plug Power has significant potential but its nascent stages lends itself to investors with an appetite for risk.

Risks are also elevated for investors given that the company is targeting a market – hydrogen fuel cells – that remains in its infancy.

Is Plug A Buy?

According to CEO Andy Marsh, Plug has successfully established scalable production which should support its revenue target north of $1 billion and its goal by the turn of the decade to hit $20 billion.

If he’s right the company is on track for a near triple digit percentage revenue increase this fiscal year versus last year and would result in top line growing by about 27x.

Is it worth a speculative bet? The stock is perhaps best viewed as a call option play where the upside is enormous while the downside loss is capped at 100%.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.