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Plug Power – Still not a must-buy

Plug Power – Still not a must-buy

Plug Power reports on a variety of projects related to hydrogen, its production, use and future markets in which it is active and feels it is a frontrunner. Company representatives talk about an H2 production facility in Georgia that is the largest of its kind in the USA. They’re active everywhere – in stacks, cryotechnologies (liquefaction), electrolyzers and hydrogen-powered vehicles.

The figures, though, speak a completely different language: Turnover indeed grew by a remarkable 70 percent to over 260 million USD in the second quarter. But the quarterly loss likewise increased 58 percent to minus 236.4 million USD, or 0.40 USD per share (minus 0.26 USD per share was the expectation for the Q2). Liquidity decreased noticeably to only about 1 billion USD, so the CFO expects that Plug needs in the next 12 to 18 months between 1 and 1.5 billion USD in new liquid capital.

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Is an offering (share placement) coming soon or will a credit of over 1 billion USD be given by the DOE (Department of Energy) via the Inflation Reduction Act? Best could be a convertible bond at the value of 1 to 2 billion USD, as large funds are focusing especially on green bonds that fit with the sustainability theme and the company has sufficient capital. The stock market, meanwhile, appears skeptical and has let the share price plummet.

“By the end of 2023 we aim to generate 1.4 billion dollars (USD) in revenue, commission more than 200 tonnes of liquid green hydrogen plants and become the largest global player, exceed 400 million dollars in electrolyzer sales, deploy 30 megawatts of stationary power products, which will serve as a substantial source of recurring revenue for Plug and finally clearly demonstrate the path of profitability for all our investors.”

                                        Plug quarterly report

That’s a lot of nice talk – but realistic? The forecasts are maintained: 1.2 to 1.4 billion USD turnover is taken as the target for the entire year 2023. The plans are huge. Alone in the business area of electrolysis, a capacity of 7.5 GW will be expected. The current figures (order book with about 224 million USD for electrolysis) speak a different language. The target level corresponds to a sales potential of up to 5 billion USD. Realistic? When?

There are many new sites in the world where hydrogen could be used in forklifts – the basis of their business with customers like Amazon and Walmart. But Plug needs to produce the liquefied hydrogen itself and earn money from it instead of buying it, even at a loss, from third parties, is my assessment. Otherwise, each new customer brings a loss with it, is my subjective view.

Plug calculates the price for hydrogen based on 0.03 USD per kWh in the USA as 2.75 USD per kg. In Europe, because of the imposed conditions and the price of electricity, around 0.75 USD per kg higher. If costs such as liquefaction and transportation are included, however, then 4.50 to 5 USD per kg is a realistic basis. Here, the subsidy via the US Inflation Reduction Act of 3 USD per kg will have a positive impact (profit margin).

Summary: Plug Power will require still longer before the share can be recommended as a buy. After placement of a convertible bond (my expectation/prediction). And then sufficient liquidity for all the ambitious plans must be reassessed. The company has very good potential to become a top player in the hydrogen sector. One should still be critical, however, since Plug is working on a large number of projects (building up capacity) in parallel, possibly positioning itself too broadly, and this at many different construction sites at the same time, and then also internationally active. Less is more, I would say. The company is for me – after studying the 10-Q (quarterly report) – too little transparent. Starting 7 USD, I’d consider the share.

Disclaimer

Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.

Author: Sven Jösting

Keep a cool head and it’ll come with time

Keep a cool head and it’ll come with time

© www.wallstreet-online.de

© www.wallstreet-online.de

Regardless of the many good news and developments around hydrogen, there must of course also be a critical consideration of the aspects that may, for example, hinder or delay rapid build-up of production capacity. In addition to adverse influences due in part to misunderstood or counterproductive regulatory measures (EU/Germany) are aspects such as the shortage of skilled workers, supply chain problems and financing. (more…)

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Can Plug deliver all that was advertised?

Can Plug deliver all that was advertised?

EuroHuge news has reached us regarding Plug Power: H2 Energy Europe has contracted Plug for an electrolysis capacity in the amount of 1 GW. A complex is to be built in Denmark and the regenerative electricity generated via wind power. The goal is to produce 100,000 tonnes of green hydrogen per year, which is to be used primarily in hydrogen-powered trucks, specifically to fuel 150,000 of them per day. (more…)

Plug Power – In the profit zone with H2 production

Plug Power – In the profit zone with H2 production

Project manager Robert Zalinski presented Plugs products at the new Duisburg site

The plans are huge: three sites are to start production already this year. The first target for the current fiscal year is 70 tonnes of hydrogen per day. This should enable a profit margin of 30 percent. Of this, 40 to 50 tonnes per day are needed for existing activities and 20 to 30 t/day will be brought to market as a tradable commodity, is my expectation.  (more…)

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Plug Power expands to Europe

Plug Power expands to Europe

Project manager Robert Zalinski presented products and site

Project manager Robert Zalinski presented products and site

The US corporation Plug Power opened its European headquarters in Duisburg, Nordrhein-Westfalen (NRW) on March 18th, 2022. The new production site of Plug Europe lies at the center of Duisburger Hafen, the world’s largest inland port. CEO Andy Marsh had really wanted to make a special trip from the United States to make the opening speech, but he was unable to because of a corona infection. Chris Suriano stepped in for him. Suriano declared, “Our local presence is very important in our key markets.” He smugly added, “We have only just begun.”  (more…)

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