Plug Power stock is resilient. On the plus side, Plug [Nasdaq: PLUG] completed its USD 123 million acquisition of Giner ELX and United. It will allow the company to not only produce hydrogen but also start making electrolyzers. As I often noted, this kind of deal would be needed for an upward trend in Plug’s price. Moreover, the fuel cell supplier announced that it had received several sizeable orders, including a recent one from a new UK customer, Asda, a Walmart subsidiary.

But then, Plug again asked for fresh capital, placing new shares worth over USD 300 million or USD 10.25 apiece. The company is seizing the opportunity, though I think a price and a market cap exceeding USD 14 and USD 5.4 billion respectively is far from reasonable. I am aware that Plug has estimated revenue and profit to top USD 1.2 billion and USD 200 million by 2024. Still, I am wary of these numbers. At least, Plug is doing a good job at investor and press relations, having investors imagine a bullish trend. I would tread carefully, however.

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I remain cautious because of the company’s financing methods, i.e., debt, restricted cash and stock issues, and the markets in which it operates. What happens once a larger number of forklifts run on fuel cells and are outfitted with hydrogen tanks?

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read more in H2-international October 2020

Risk warning
Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small- and mid-cap businesses, which means their stocks may experience high volatility. The information in this article is based on publicly available sources, and the views and opinions expressed herein are those of the author only. They are not to be taken as a suggestion of what stocks to buy or sell and come without any explicit or implicit guarantee or warranty. The author focuses on mid-term and long-term prospects, not short-term gains, and may own shares in the company or the companies being analyzed.

Author: Sven Jösting