Plug Power Stock in Tragic Performance: Is Hydrogen at the End?

Last Updated: 15. November 2023By

It is a tragedy of the first order: But take a look at Plug Power’s stock price yourself:


Since its peak at the beginning of 2021, the hydrogen title has depreciated by 94 percent (as of 13.11.2023, 9:00 a.m., Stuttgart Stock Exchange). The most recent setback, however, only came at the end of last week. For example, the share price fell by about 40 percent on Friday alone.

What does Plug Power actually do? Plug Power is actually a promising company. The US company is a pioneer in the field of fuel cells. With its „GenDrive“ system, Plug combines fuel cells with storage solutions and supplies this complete package, among other things, to logistics companies, which use it, for example, in forklifts. In addition to fuel cells, storage solutions and hydrogen filling stations, the Americans also develop and produce PEM electrolyzers. Hydrogen can be produced in an environmentally friendly way in these plants using green electricity.

It remains to be said: Plug Power is one of the most ambitious hydrogen companies in the world. If one recalls the enormous potential attributed to the (green) energy carrier, shouldn’t the company be flourishing on the stock exchange? But it’s not that simple.

How Plug fared in the third quarter In the third quarter of 2023, Plug achieved revenues of just under 199 million US dollars, as the company announced last Thursday. This is an increase of only about 5 percent compared to the same period last year. For a company whose imagination is fuelled by mega growth, this is a debacle. But not only that: In the second quarter, the hydrogen specialist had generated around 260 million dollars in revenue. So growth compared to the previous year is not only weak, but compared to the previous quarter it was simply non-existent.

The company’s own forecast for 2023 is therefore increasingly out of reach. Management had originally forecast revenues of 1.2 to 1.4 billion dollars. However, in the first nine months it was only around 670 million dollars. Since Thursday, it has become even more unlikely that Plug will be able to fulfil its high-flying growth forecast.

Not only are revenues in crisis, the income side is also disastrous. In Q3, the company’s loss amounted to 283.5 million dollars. For comparison: In the same period last year it was „only“ around 171 million dollars. Operatively (net cash used in operating activities), Plug burned almost 864 million dollars in the first nine months – and thus significantly more than in the same period last year (522 million).

Reasons for weak figures: Stock market in the dark Low revenues, high losses, high cash burn rate: For the stock market this is an unpleasant mixture. Especially since the new figures were once again significantly below the expectations of many analysts. The capital market has been hoping for many months that the hydrogen fantasy around Plug Power will finally be reflected in concrete figures and that breaking the profit threshold will become possible. Since Thursday, this hope has now gone.

The management, however, did not provide too concrete an explanation. Only this much: There had been various „acts of higher force“ on the North American market, through which the supply chains had been negatively affected. The fact that Plug had reported relatively restrainedly on the background of the weak figures caused additional uncertainty on the stock exchange.

In any case, experts currently see major challenges around the ramp-up of the hydrogen economy. In particular, the high interest rates result in increased investment costs. The fear is that many companies will therefore refrain from investing, for example in green hydrogen – which would brake Plug’s business in the medium term. And even in renewable energies themselves, which are indispensable for the green variant of the energy carrier, there are currently considerable growth concerns due to the macroeconomic environment.

Plug hopes for government support On the other hand, Plug Power still sees itself as a future beneficiary of government support programs. In the USA, for example, the company is hoping for the Inflation Reduction Act, which is intended to provide tax relief for hydrogen producers. However, it is still unclear how the legislative package pushed by President Joe Biden will affect Plug.

After all, the US Department of Defense recently announced seven so-called hydrogen hubs. These are intended to provide a holistic value chain: starting with the generation of green electricity and ending with the production of green hydrogen and the supply of industry. Plug Power will be involved in all seven hubs, according to its own statements.

In Europe, too, the Americans are hoping for government backing – for example through the Net Zero Industry Act and the Hydrogen Bank. The EU Commission also sees green hydrogen as one of the most important levers for decarbonizing certain economic sectors, such as the steel industry.

My conclusion for you The big growth fantasy around green hydrogen is fizzling out on the stock exchange. For the capital market, it’s very simple: the problems outweigh the opportunities massively, at least from the current point of view. Plug Power did not manage to send new signals of hope as part of the Q3 presentation. On the contrary: The crisis seems to be even more far-reaching than feared.

Interesting: The weak figures not only weighed on the Plug share, but on the entire hydrogen sector. Competing titles such as Nel ASA, ITM Power or Nucera had to give up feathers at first – albeit nowhere near as much as the Plug share itself. A kindred effect, which has been a tradition for hydrogen shares for years.

So as an investor you have to bring strong nerves with you at the moment. If you want to invest in the hydrogen sector despite all the problems and at the same time minimize your investment risk, you should focus on the big players instead of the notoriously deficit-prone smaller stocks like Plug Power. These are much more broadly diversified, better funded and are called Linde and Air Liquide.