Plug Power Down 39% YTD: How Should Investors Play the Stock?

Plug Power Inc. PLUG, a prominent name in the green hydrogen industry, has seen a 39% plunge in its stock price in the year-to-date period, underperforming the industry as well as the S&P 500. While the industry declined 7% over the same time frame, the S&P 500 advanced 1.8%. The company’s peers, FuelCell Energy, Inc. FCEL and Bloom Energy Corporation BE, have declined 30.1% and inched up 0.1%, respectively.Plug Power Lags Industry & S&P 500Image Source: Zacks Investment ResearchThe company has been persistently suffering due to a high cash burn rate and negative gross margins over the past several quarters. Amid this, the leading hydrogen energy stock is trading above its 50-day moving average but below its 200-day moving average.PLUG Stock’s 50-Day & 200-Day Moving AveragesImage Source: Zacks Investment ResearchSome investors might see this dip as an opportunity to buy Plug Power, considering the vast long-term market potential of green hydrogen and the company’s solid product pipeline. However, it would be prudent to assess if it is the right time to invest in the stock. Let’s delve deeper.Factors Affecting PLUG StockPlug Power has been plagued by a decrease in revenues from the sales of hydrogen equipment and related infrastructure, its major source of income. Lower sales of GenDrive units, GenSure stationary backup power units, cryogenic storage equipment and liquefiers have been weighing on the company’s performance over the past few quarters. The decline in revenues from the sales of hydrogen infrastructure is primarily attributable to the reduced hydrogen site installation activities, partially offset by higher sales of electrolyzers.PLUG witnessed a significant decline in the number of hydrogen site installations in 2024, which reduced from 52 to 15 on a year-over-year basis. In the first quarter of 2025, this number reduced to one from three in the prior-year quarter. This has been adversely impacting its revenues related to the sales of hydrogen infrastructure. Additionally, fewer projects and a slower rate of progress on the existing ventures have been hurting revenues from the sales of cryogenic storage equipment and liquefiers.Another major issue that has plagued Plug Power is its inability to generate positive gross margins and cash inflows. It recorded a gross margin of negative 55% in first-quarter 2025 compared with a gross margin of negative 132% in the year-ago quarter. Meanwhile, its operating cash outflow totaled $105.6 million in the first quarter compared with $167.7 million in the year-ago period.Given the weak liquidity position, the company has been selling shares to raise funds for its operations and invest in hydrogen plants. In the first quarter, it received $267.5 million as net proceeds from equity sales and the amount totaled $857.9 million in 2024.Plug Power also operates in the highly competitive green hydrogen and fuel cell markets. As one of its peers, FuelCell Energy is a well-known producer of stationary fuel cells and electrolysis platforms. PLUG’s another peer, Bloom Energy, is a leading provider of solid-oxide fuel cell systems for on-site power generation.Long-Run Prospects Remain BrightGoing by some estimates that state that the green hydrogen energy market may grow to $30 billion by 2030, Plug Power offers solid long-term growth opportunities.The company’s strong expertise in providing and installing electrolyzers is underlined by its deployment of substantial proton exchange membrane (PEM) electrolyzer systems to date. This is underlined by its successful proton exchange membrane (PEM) electrolyzer deployment at the largest U.S. electrolytic liquid hydrogen production plant in Georgia. It's worth noting that PLUG also has a significant presence in Rochester, NY, with its Gigafactory being one of the biggest PEM manufacturing facilities in the country.The leading hydrogen company's first-quarter 2025 results showed some signs of recovery. PLUG generated revenues of $133.7 million, an increase of 11.1% year over year, driven by growth in electrolyzer deliveries, sustained demand in materials-handling and the ongoing deployments in its cryogenic platform.Although the company reported negative gross margins in the first quarter, the metric improved year over year, driven by its cost reduction and supply-chain optimization efforts, price increases and progress in leveraging its hydrogen platform.These efforts aided Plug Power in slowing down its cash burn rate in the quarter, which declined nearly 50% year over year. In first-quarter 2025, PLUG launched Project Quantum Leap, targeting to generate more than $200 million in annualized savings. As part of the project, it expects to benefit from sales growth, pricing actions, inventory and capex management, and increased leverage of its hydrogen production platform. It expects the project to boost its cash flow and reduce the cash burn rate in the quarters ahead.PLUG’s Estimate RevisionsThe Zacks Consensus Estimate for PLUG’s bottom line for second-quarter 2025 and 2025 has increased in the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Image Source: Zacks Investment ResearchValuationFrom a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 2.57X against the industry average of 23.05X. In comparison, FuelCell Energy and Bloom Energy are trading at (1.17X) and 39.34X, respectively.Image Source: Zacks Investment ResearchFinal TakeWhile the significant dip in PLUG stock is concerning, its strong foothold in the market, innovative product portfolio and strategic partnerships are likely to be beneficial in the long run. The ongoing challenges, including lower sales of hydrogen infrastructure, negative gross margins and cash outflows, are likely to continue to impact this Zacks Rank #3 (Hold) company’s performance in the short term.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Plug Power, Inc. (PLUG): Free Stock Analysis Report FuelCell Energy, Inc. (FCEL): Free Stock Analysis Report Bloom Energy Corporation (BE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks