Plug Power (NASDAQ: PLUG) at the time of writing is trading at $36.50, over 50% down from its all-time high In January ($75.49). I originally bought Plug Power stock, a provider of clean hydrogen and zero-emission fuel cell solutions, in February (22% higher than now).
Nevertheless, despite the sell-off, I remain confident in the longer-term potential for the company, so I have been buying more.
Why is Plug Power stock selling off?
Recently, Plug Power announced that there were some inaccuracies with its past financial reports. The fuel cell maker said that it would have to reissue some fiscal and quarterly results from 2018-2020. The company said that the mistakes didn’t affect the underlying business and that there were no issues raised regarding its fourth quarter 2020 and year-end results. Plug Power has also been swept up in the broader sell-off of growth stocks due to inflation fears that have caused treasury yields to spike.
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What are the risks?
There are some things to be aware of, though, when it comes to Plug Power stock. In the last year, the company’s share price has had overall an incredible run, rising over 1,000%. Therefore, it could be argued that this sell-off recently isn’t overdone. The company was founded in 1997, and it has not yet demonstrated that its business model can be profitable. It reported a net loss of $476.3 million, in its last earnings report.
Tesla CEO Elon Musk has been a critic of hydrogen fuel cells, saying he believes they are unrealistic. However, General Motors and Toyota have stated that they are eager to embrace hydrogen.
What might the future hold for the business?
Recently, the company increased its 2024 billing target by more than 40% to $1.7 billion. JPMorgan projects the overall market opportunity for Plug Power to be greater than $200 billion, and expects it to show meaningful profits in 2023 to 2024. It recently upgraded Plug stock to overweight from neutral and maintained its price target at $65.
Why I am buying more Plug Power stock
Plug Power has ambitious plans and exciting future revenue targets, but of course these are speculative for the moment. Yes, it isn’t profitable just yet but with clients like Amazon and Walmart, I am encouraged by the longer-term prospects for the company. The recent accounting errors are a cause of concern but these have no impact on current contracts, so I think they have provided a buying opportunity. I am happy to take the chance (again) on Plug Power. This is because in the future it has the potential to be a renewable energy heavyweight. Therefore, I am loading up on Plug Power stock here and lowering my average price.
