Plug Power Stock Down 38% in Past Six Months: What Should Investors Do?

Plug Power Inc. PLUG, a leading player in the green hydrogen industry, has seen a 38% drop in its stock price in the past six months, underperforming the industry as well as the S&P 500. While the industry grew 7.3% over the same time frame, the S&P 500 advanced 6.6%. The company’s peers, Bloom Energy Corporation BE and Ballard Power Systems Inc. BLDP, have returned 12.2% and 19%, respectively, over the same period.

Plug Power Stock Lags Industry, S&P 500 & Peers

Some investors might see this dip as an opportunity to buy Plug Power, considering the vast long-term market potential of green hydrogen and its 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.

Ongoing Challenges Faced by PLUG

Plug Power is grappling with lower sales of hydrogen equipment and related infrastructure, its major source of income. Sales of some of the company’s flagship products, including GenDrive units, GenSure stationary backup power units, cryogenic storage equipment and liquefiers, have declined 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.

Decline in demand for hydrogen site installations has been a major concern. The company’s number of hydrogen site installations significantly reduced from 52 to 15 in 2024 on a year-over-year basis. In the first quarter of 2025, this number further reduced to one from three in the year-ago quarter. This has been putting pressure on 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.

Plug Power’s inability to generate positive gross margins and cash inflows over time has also affected the investor sentiment. It recorded a gross margin of negative 55% in first-quarter 2025 compared with a gross margin of negative 132% in the prior-year quarter. Meanwhile, its operating cash outflow totaled $105.6 million in the quarter compared with $167.7 million in the year-ago period.

Given its weak liquidity position, PLUG has been selling shares to raise funds for its operations and invest in hydrogen plants. The company also operates in the highly competitive green hydrogen and fuel cell markets. As one of its peers, Ballard Power Systems is a well-known producer of proton exchange membrane (PEM) fuel cell products. 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 Promising

Going 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 significant presence in Rochester, NY, with its Gigafactory being one of the biggest PEM manufacturing facilities in the country.

Plug Power's results showed some signs of recovery in the first quarter of 2025. PLUG’s revenues were $133.7 million, reflecting an increase of 11.1% year over year. Revenues were 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 helped Plug Power slow down its cash burn rate in first-quarter 2025, which declined nearly 50% year over year. In the same quarter, it also launched Project Quantum Leap, with a target 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. PLUG believes that the project will boost its cash flow and reduce the cash burn rate in the quarters ahead.

In January 2025, Plug Power secured a loan guarantee worth $1.66 billion from the U.S. Department of Energy (DOE) to support the construction of six green hydrogen production facilities. This marks a significant step in the expansion of its domestic manufacturing and hydrogen production capabilities. Also, the Senate's revision of the Trump administration's proposed tax bill is expected to offer two-year tax credit extensions for the hydrogen industry. This is likely to help Plug Power remain solvent as it considers scaling up its business.

PLUG’s Estimate Revisions

The Zacks Consensus Estimate for PLUG’s bottom line for second-quarter 2025 and 2025 has increased in the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Valuation

With respect to valuation, Plug Power is trading at a forward price-to-earnings ratio of a negative 3.42X against the industry average of 23.18X. In comparison, Bloom Energy and Ballard Power Systems are trading at 43.82X and negative 5.39X, respectively.

Conclusion

While the significant dip in PLUG stock remains concerning, the company’s strong market position, innovative product portfolio and solid prospects in the green hydrogen industry are likely to be tailwinds in the long run. However, 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 near term.

While current shareholders should hold their positions, new investors should wait for the stock to provide a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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