Is PlugPower Stock A Good Stock To Buy? from SMSMAN's blog

Plug Power’s stock is down significantly from its 52-week high of around 29, and now trades at around $8.00 a share. Plug Power’s foreseeable revenue is firmly placed on the company’s stationary solutions, but with increasing uptake of fuel cell technology, mobility solutions will play a key role through 2024, where revenue is expected to significantly increase. E-mobility solutions face a number of issues, mainly a slow uptake of hydrogen and a market where the price remains high. The company should start to see strong returns as it heads towards 2024, with improved uptake of hydrogen solutions and the overall hydrogen market and the installation of new stationary solutions infrastructure.

Is PlugPower Stock A Good Stock To Buy?

What Are the risks ?

There are few risks to the actual company, which is well Apple stock capitalized, Plug Power’s biggest risk like in the fact that the company is in a market, where product uptake is still taking time. The fuel cell market will pick up steam over the next few years though, and this will continue to help revenue along. Even if a market recession hits, the trajectory for the market should not be significantly affected considering that green energy solutions are going to remain a priority.

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Plug Power Stock Forecast for 2024 and its Valuation (H3)

Plug Power’s stock should see significant improvements in 2024, and over the next couple of years mainly owing to the fact that the hydrogen market is expected to pick up significantly. Currently the stock trades at a valuation of around 5x sales, which is not expensive if you considering that eventually revenue growth will become quicker, especially as hydrogen technology is adopted. I expect the company to become EBITDA positive

Hydrogen Fuel Cell Market

The global fuel cell market is expected to continue to grow at a significant rate over the coming years with market analysts predicting that the rate of growth is expected to be significant with the market growing from around $3 billion in 2023, to 9 billion by 2027.

What Will Drive The Fuel Cell Market?

The hydrogen fuel cell market has a number of applications, including buses, cars, warehouse logistics, where there is a need to power trucks, forklifts, etc. Increasingly, global distribution companies are turning to hydrogen fuel cells, with the likes of UPS, Toyota, and Nikola all looking towards hydrogen fuel cells.

The cost of producing hydrogen still remains a factor in the overall fortunes of the stock, and while the cost is coming down, without subsidies it is not competitive. Cost of fuel cells are falling as well and as is the cost of producing hydrogen which will get to around $2-3 per KG by 2027, down from an average of $5-6 in the current environment, which ensures Plug’s products remain competitive.

Competitive advantages of Plugpower

Marketshare

According to analysts, Plug Power in its business segment has close to 90% market share that is mainly the hydrogen-powered fuel cell market. This means the company is well positioned to take advantage of the growth that is expected over the next few years.

Technology

Plug Power has a significant lead in technology; its main competitors are large-scale industrial players such as Siemens, all of whom lag in infrastructure and technology. This has led to significant distribution and selling advantages for blue chip companies who buy Plug’s products. Furthermore, the turnkey solutions of the company are also playing a significant role in their adoption by players. Cost advantages and modular setups remain the biggest factors for the company.

Plug Power’s Business:  Electric Vehicle’s Business And E-Mobility Market

The company’s strategy revolved around three key turnkey projects:

The first is GenFuel, which allows drivers to refuel and provides key infrastructure facilities for mobility solutions by offering 15,000-18,000 gallon hydrogen trucks, as refueling stations. It is also planning to offer a number of other solutions such as Progen an OEM solution, and Gensure, which helps large scale infrastructure needs such as data centers.

Hydrogen fuel cells have been relatively nascent until now, but a number of new industries, including the auto industry, and the transportation industry are considering fuel sources to drive their fleets.  Hydrogen is still relatively expensive, but plug power continues to deploy its infrastructure, hoping that the initial investment can turn into market dominance later, when the cost of hydrogen comes down.