As countries around the world have awoken to the severity of global warming over the past few decades, interest in green energy has been steadily rising. And as global efforts to reign in the damage, such as the Paris Agreement, have picked up speed, so too has investor interest in producers of green energy.
Plug Power’s (Nasdaq: PLUG) position as one of the leading hydrogen fuel cell producers has kept the company at the top of investors’ radar. But with the stock having lost just over 60% of its value over the past four months, investors are questioning whether it is a good long-term play.
Plug Power’s production of green hydrogen energy for electric vehicle and stationary power markets has helped the company attract significant interest over the past year, sending the stock’s price soaring from its trading price in the $4 range a year ago. The company is actually the second most heavily searched green energy stock, second only to Tesla.
Short-lived high on Groupe Renault deal
So it isn’t surprising that in late January, following news of South Korea’s SK Group taking a 10% stake in the company; a 50-50 joint venture with French automobile manufacturer Groupe Renault was announced to incorporate Plug Power’s fuel cell technology within commercial vans; there was also an announcement that the company had surpassed its gross billing goal for 2020 and was increasing estimates for 2021 and 2024, Plug Power’s stock price reached a 12-month high of $75.49. But its high was short lived.
News of a major restatement of its books for the past three years, showing lower profitability than it previously had experienced, coupled with speculation that that the Federal Reserve will soon raise interest rates and a widespread selloff of green energy and tech stocks driven by fears that the Biden Administration will raise capital gains taxes, saw Plug Power’s steadily decline in recent months.
On May 11th, the stock opened at $18.60. Meanwhile, in early May the company again made headlines over news of a class action suit filed on behalf of investors who allege that the company and some of its directors and officers violated the Securities Exchange Act of 1934 because of its failure to notify investors that it would not be able to file is 2020 annual report on time due to the restatement of its books.
North America’s largest green hydrogen production facility
Fortunately for Plug Power, investors still believe that the company’s positives outweigh its negatives, a sentiment bolstered by the fact that it plans to build North America’s largest green hydrogen production facility, which the company says will be able to produce 45 metric tons of green hydrogen per day. By adding this to Plug Power’s existing production facility, the company expects that it will ultimately be able to put out 500 tons of green hydrogen energy per day by 2025 —all of which it expects to be able to deliver to consumers at a price point similar to the cost of diesel fuel.
Added to that is its most recent news of a memorandum of understanding with Johnson Matthey for the joint creation of an electrolyser technology with enhanced energy efficiency and performance over existing systems. Added to that is the fact that contracts Plug Power has long had in place with Amazon and Walmart that were more favourable to the retail giants are coming to an end, opening up the ability for the company to renegotiated more favorable terms for itself moving forward.
“Biden’s plan to slash U.S. greenhouse gases by at least 50% below 2005 levels by the end of this decade will help bolster the global economy and stave off catastrophic climate change. The new emissions target nearly doubles the reductions the Obama administration pledged as part of the 2015 Paris climate accord. This plan is bold, ambitious, and absolutely necessary,” said Dr. Alex Ivanenko, founder and CEO of HyPoint, a California-based start-up developing a hydrogen fuel cell system with zero CO2 emissions for the air transportation vehicles.
“Hydrogen — and hydrogen fuel cells — will be critical to meeting this goal. Hydrogen energy is mentioned twice in the administration’s press release and in Biden’s proposed $2 trillion clean energy plan aimed at putting ‘the U.S. on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.,’” Ivanenko said, pointing to a recent McKinsey study that estimates that the U.S. hydrogen economy could generate $140 billion and support 700,000 jobs by 2030.
It also doesn’t hurt that analysts are fairly bullish on the company as well, with the majority covering the company rating the company as a buy, though not without warnings that there is no guarantee that the company’s green hydrogen energy couldn’t ultimately be outdone by another technology that may eventually make its way down the pipeline. And it seems that investor interest in the company has also been reenergized in recent days, as the stock has been continuing to slowly inch back up, most recently closing at $29.69 on May 26th.
