Plug Power, a developer of hydrogen fuel cell systems, saw its stock rise more than 5% on Tuesday following the announcement of a new supply deal.
The company will deliver two 30-tons-per-day hydrogen liquefaction systems to TC Energy, an oil and natural gas pipeline company, in Q2 and Q3.
These deliveries will support TC Energy’s properties that have yet to come online. The CEO of Plug Power, Andy Marsh, stated that this new deal “validates our investment in Plug’s liquefaction capabilities as part of our vision to build an end-to-end green hydrogen solution.”
The company and its customer, TC Energy, share a commitment to providing sustainable and secure energy, and together they look forward to accelerating the growth of the hydrogen market, according to the CEO.
Risks To Owning Plug Power
In spite of the rise today, risks to owning Plug Power are plentiful:
Industry: The hydrogen fuel cell industry is still in its early stages of development, and the demand for hydrogen fuel cell technology is still uncertain. There is a risk that the market for Plug Power’s products may not develop as expected.
Execution: Management has a history of missing financial targets and operational milestones, so questions arise about the company’s ability to execute on its plans and meet its financial goals.
Competition: The playing field is competitive with well-established companies and new entrants vying for market share. Can Plug Power compete well against its rivals? The jury is still out.
Financing: The top brass has a history of raising capital through stock and debt offerings, which dilutes existing shareholders. Raising capital in a recession could prove challenging.
Regulatory: Hydrogen fuel cell technology is subject to a range of regulations at the local, state, and federal levels. Changes in these regulations could impact the company’s ability to sell its products or comply with safety standards which may adversely hurt PLUG.
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