Should You Buy Plug Power While It's Below $3?

Plug Power (NASDAQ: PLUG) is on a mission to deliver sustainable and clean energy with its innovative hydrogen fuel cells. According to one estimate by consultants at Deloitte, the green hydrogen market could skyrocket to a staggering $1.4 trillion by 2050, giving Plug Power massive upside potential.

However, the clean energy company has faced major challenges over the last few years. After peaking at around $75 per share in 2021, the stock has since plummeted an astonishing 97% as it deals with business challenges and an ever-evolving environment.

Plug Power may appear to be a bargain, with its shares down significantly and trading below $3 per share. But before you buy stock in the company, there are some things you'll want to consider first.

Plug Power's green hydrogen platform is growing

Plug Power develops hydrogen fuel cells and aims to create a commercially viable market for this cutting-edge technology. Its vision is to create a comprehensive hydrogen ecosystem that includes producing, storing, transporting, and dispensing liquid green hydrogen.

Harnessing the power of hydrogen and oxygen, Plug Power's innovative fuel cell technology generates clean electricity without combustion. This technology powers material-handling vehicles like forklifts, stationary power stations (generators), and electric delivery vans. Some of its most recognizable clients include Amazon and Walmart.

Last year, Plug Power launched a 350,000-square-foot fuel cell manufacturing facility in New York designed to meet the growing demand for its fuel cells. Earlier this year, it began producing liquid hydrogen at its hydrogen production facility in Georgia, and it has plans for additional plants in New York, Louisiana, and Texas.

Image source: Getty Images.

Slow growth and mounting losses have weighed on the stock

Plug Power's top-line growth had been solid; revenue grew 27% last year to $891 million. However, that growth has reversed over the last year. Through three quarters of 2024, Plug Power's revenue was $437 million, down 35% compared to the same period last year.

The company has struggled with slowing sales of its hydrogen infrastructure. This year, the company had 11 hydrogen site installations compared to 41 last year, as the hydrogen economy has developed more slowly than expected.

These slowing sales come as the company continues to bleed money. Through Sept. 30, Plug Power has had an operating loss of $720 million, up from its loss of $718 million through the same period last year. In the last 12 months, the company has lost nearly $1.5 billion.

PLUG Revenue (TTM) data by YCharts.

What's next for Plug Power?

Plug Power is taking steps to improve its margins and reduce its cash burn. Earlier this year, it hired Dean Fullerton as its new Chief Operating Officer (COO). Fullerton recently oversaw engineering services for Amazon across North America, Europe, and emerging countries and will look to help Plug Power improve its operational efficiencies across its supply chain.

It recently reported third-quarter revenue of around $174 million, well below analysts' expectations of $210 million.

Its guidance for the remainder of this year and next year was also disappointing. The company guided for lower growth next year, saying that it expects revenue to be between $850 million and $950 million, below analysts' estimates of $1.18 billion.

Is it a buy?

The long-term market opportunity for green hydrogen could be huge. However, Plug Power has its work cut out for it as it navigates challenging times for the industry and looks to grow while also slowing down its cash burn rate.

Plug Power has significantly diluted shareholders for several years to fund its money-losing business. Over the past 10 years, Plug Power's outstanding shares have gone from 173 million to nearly 880 million. In other words, one share is worth 80% less from dilution alone.

While the long-term opportunity in green hydrogen is appealing, Plug Power still has significant work ahead of it to improve its margins and bottom line. For that reason, investors should avoid investing in the hydrogen company until significant improvements are made.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.