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Yahoo
a day ago
- Business
- Yahoo
Will the Cash Burn Reduction Strategy be a Game Changer for Plug Power?
Plug Power Inc. PLUG has been plagued by its inability to turn a profit, which has required it to raise outside capital for funding its operations. The company has been persistently suffering due to a high cash burn rate and negative gross margins over the past several this, 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. However, PLUG's inability to generate positive gross margins and cash inflows over the long term has been a major the first quarter of 2025, the company incurred a net loss of almost $197 million (21 cents per share), which was more than its revenues. On a positive note, the metric reflected an improvement from $295.6 million loss it reported in the year-ago quarter. Meanwhile, its operating cash outflow totaled $105.6 million in first-quarter 2025 compared with $167.7 million in year-ago recorded a gross margin of negative 55% in the first quarter compared with a gross margin of negative 132% in the year-ago-quarter. Although negative, the gross margin improvement was driven by the its cost reduction and supply-chain optimization efforts, price increases and progress in leveraging its hydrogen efforts aided Plug Power to slow 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. Among Plug Power's major peers, FuelCell Energy, Inc. FCEL is a well-known producer of stationary fuel cell and electrolysis platforms that helps in decarbonization of power and hydrogen production. Exiting second-quarter fiscal 2025, FuelCell Energy had cash and cash equivalents (unrestricted) of $116.1 million compared with the current portion of long-term debt of $17.1 million. In the first six months of fiscal 2025, FuelCell Energy used net cash of $75.6 million from operating activities, down 21% year over another peer, Bloom Energy Corporation BE is a leading provider of solid-oxide fuel cell systems for on-site power generation. Bloom Energy exited first-quarter 2025 with cash and cash equivalents of $794.8 million, higher than $584.4 million of current liabilities. Bloom Energy used net cash of $110.7 million from operating activities, down 24.8% year over year. Shares of Plug Power have lost 59.1% in the year-to-date period compared with the industry's decline of 8.3%. Image Source: Zacks Investment Research From a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 1.69X against the industry average of 22.83X. PLUG carries a Value Score of F. Image Source: Zacks Investment Research The Zacks Consensus Estimate for PLUG's bottom line for second-quarter 2025 and 2025 has increased in the past 60 days. Image Source: Zacks Investment Research PLUG stock currently carries a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 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 Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
23-05-2025
- Business
- Yahoo
Down 75%, Is Plug Power a Screaming Buy, or Will It Keep Plunging?
Plug Power stock has plunged further over the past year due to its continued losses and dilutive secondary stock sales. The hydrogen company is working to reduce its costs and drive growth. Questions about its future funding needs remain. 10 stocks we like better than Plug Power › Plug Power's (NASDAQ: PLUG) stock has gotten pulverized over the past year. Shares are down by 75% over that time span, woefully underperforming the S&P 500's more than 12% rise over the same period. Several factors have weighed on the hydrogen company's stock price, including the dilutive share sales it engaged in to fund its operations and expansion. However, while the shares are down sharply, there are some positive points to be made about the business. The question is whether those catalysts make the hydrogen stock a buy or if it will likely continue sinking. Plug Power is coming off a challenging year. The hydrogen company's revenue declined from $891 million in 2023 to $628 million last year due to a 45% drop in the sales of equipment and related infrastructure. Meanwhile, its total operating expenses ballooned from $835 million in 2023 to nearly $1.4 billion in 2024. As a result, its net loss last year was more than $2.1 billion, up from nearly $1.4 billion in 2023. The company burned through cash to fund its operations and expansion. Because of that, it needed to raise outside capital to plug the massive hole in its finances. One way it did that was by selling stock. For example, it raised $280 million by selling shares earlier this year. Those share sales boosted its outstanding share count by more than 28% last year, significantly diluting previous investors. Plug Power can't continue to burn cash forever. At some point, investors will stop giving the company fresh capital to stay afloat. The company's management team realized this, leading to a strategy shift last year. The hydrogen company undertook several actions to reduce its cash burn and put itself on track to eventually become profitable. Part of its new strategy has been dubbed "Project Quantum Leap" -- a plan to optimize its operating footprint, resources, and ongoing expenses to reduce its annual expenses by more than $200 million. Project Quantum Leap is part of a multiyear strategy to reach consistent profitability. Plug Power aims to grow its energy and applications businesses at 30% compound annual rates through 2030. This revenue growth will produce scale advantages, enabling the company to steadily march toward profitability. It expects to end this year with positive gross margin run rates. Management's goals are to reach positive operating income by the end of 2027 and overall profitability by the close of 2028. A big issue for Plug Power has also been funding its operations and expansion. As mentioned, the company has routinely turned to dilutive stock sales to bridge the gaps in its finances. However, they've weighed heavily on the stock price, which is down by more than 99% since the company went public more than two decades ago. Plug Power has been looking for other ways to fund its business. It closed a $525 million secured credit facility with Yorkville Advisors earlier this year. Plug also closed a nearly $1.7 billion loan guarantee from the U.S. Department of Energy in early January to support the development of six projects to produce zero and low-carbon hydrogen. As a result of these financing measures, the company doesn't anticipate making any additional dilutive equity offerings this fiscal year. However, the company's loan guarantee was finalized under the Biden administration. There has been some speculation that President Trump might cancel it. Even if he doesn't, Trump might not be as supportive of hydrogen, which could impact Plug's ambitious sales growth targets. That could affect its profitability timeline and ability to raise additional capital in the future. Plug Power has tremendous promise. The company is emerging as an early leader in the hydrogen sector. The anticipated rapid growth in demand for hydrogen could fuel robust growth for the company. However, it will have to traverse a long road if it's going to reach profitability, and that road has many potential obstacles. Because of that, there's a high risk that Plug Power's stock could continue to sink in the near term, especially if it needs to sell more shares to fund its operations and growth. That makes it too risky for most investors to consider buying. Before you buy stock in Plug Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Plug Power wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Down 75%, Is Plug Power a Screaming Buy, or Will It Keep Plunging? was originally published by The Motley Fool
Yahoo
14-05-2025
- Business
- Yahoo
Is Plug Power Finally Starting to Turn Things Around?
Plug Power's first-quarter results showed some progress. The company expects its future results to be even better. It still has a long way to go before it can self-fund its business. 10 stocks we like better than Plug Power › Plug Power (NASDAQ: PLUG) has struggled throughout its history. The leading hydrogen company hasn't been able to turn a profit, which has forced it to steadily raise outside capital to fund its operations and expansion. That has weighed heavily on its stock price. However, Plug Power's recent first-quarter report showed some signs of progress. Here's a look at that report and whether it's a sign that the hydrogen stock is finally turning things around. Plug Power posted $133.7 million in revenue in Q1. That was up from $120.3 million in the year-ago period. The hydrogen company benefited from an increase in electrolyzer deliveries, continued materials-handling demand, and the ongoing deployments in its cryogenic platform. However, the company still lost a lot of money. Its total net loss in the period was almost $197 million, which was more than its revenue. On a more positive note, that was an improvement from the nearly $296 million loss it posted in the year-ago period. Plug benefited from a significant improvement in its gross margin (though it was still a negative 55% in the period). Driving the improvement was the ongoing optimization of its supply chain, cost reductions, price increases, and progress in leveraging its leading hydrogen platform. Those efforts helped slow the company's cash burn, which has fallen from $288.3 million in last year's Q1 to $152.1 million this year. That's still a concern, given that Plug ended the quarter with only $295.8 million in unrestricted cash on its balance sheet. The company would run out of money in two quarters at its current cash-burn rate. Plug took a big step toward plugging up that hole by securing a $525 million secured credit facility with Yorkville Advisors earlier this month. It drew down $210 million of that facility to shore up its liquidity. It subsequently used $82.5 million to retire an existing convertible debenture with Yorkville. As a result of this financing, Plug doesn't expect to need to dilute existing investors this year by issuing more stock to fund its business. Plug expects further improvements in its financial results in the future. The company launched Project Quantum Leap earlier this year, which aims to deliver more than $200 million in annualized cost savings. That plan includes workforce reductions, facility consolidations, cuts in discretionary spending, and limiting capital spending to critical near-term requirements. On top of that, Plug expects its investments in expanding its hydrogen business to drive sales growth. The company has an ambitious target of delivering 30% compound annual growth in its energy and applications businesses from 2025 to 2030. That combination of falling costs and rising sales put Plug on a pathway toward profitability. However, it will take a while to reach that goal. The company expects 2025 to be a transformational year where it aims to exit with a positive gross margin run rate. Plug aims to exit 2027 generating positive operating income. That would put it on pace to reach overall profitability by the end of 2028. That ambitious plan requires a lot to go right for the company. Demand for hydrogen needs to grow briskly to support rising pricing and sales. The company must also deliver its expansion projects on time and on budget. It also needs to keep a tight lid on costs. On top of everything, Plug will need to continue raising outside capital to fund its operations and expansion. Earlier this year, the company closed a nearly $1.7 billion loan guarantee from the U.S. Department of Energy, which would help fund the build-out of up to six low-carbon hydrogen plants. However, there are concerns that the Trump administration might cancel this loan. If that happens, Plug Power would have a big hole to plug. It might need to sell more stock to fund these projects, which would further dilute existing investors and weigh on the stock price. Plug Power's Q1 report showed some positive progress in its efforts to grow its business and reach profitability. However, the company hasn't turned the corner just yet. It needs to continue reducing costs and growing its business to finally start making money, which will enable it to become self-sufficient. Until it reaches that point, it might need to continue diluting existing shareholders by selling stock. Because of that, it remains a very high-risk investment that might never live up to its promise. Before you buy stock in Plug Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Plug Power wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $598,613!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $753,878!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 169% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is Plug Power Finally Starting to Turn Things Around? was originally published by The Motley Fool
Yahoo
07-04-2025
- Business
- Yahoo
Why Plug Power Stock Plunged Another 16% in March
Plug Power (NASDAQ: PLUG) has now logged three straight months of double-digit percentage stock price drops, with shares of the hydrogen fuel cell maker tumbling another 16.1% in March after losing nearly 13% in each of the first two months of the year, according to data provided by S&P Global Market Intelligence. The hydrogen stock is now down a whopping 43% so far in 2025, as of this writing. While it's hard to remember when Plug Power last impressed investors with its numbers, some of the figures it revealed in March induced more investors to dump the stock. Sales of Plug Power's equipment slumped by 45% in 2024 to only $390 million. Lower demand for its fuel cell systems, fewer hydrogen site installations and new liquefier projects, and slow progress on existing projects were just some of the factors that dragged down its top line. The company evidently has a demand problem, but it gets much worse. The clean energy company reported a negative gross margin of 78% on the sale of its hydrogen infrastructure and equipment for 2024 versus a negative gross margin of 7.6% in 2023. Simply put, Plug Power's cost of production has become so high that it lost 78 cents for every dollar of revenue it brought in through its core business last year. It's hard to understand the magnitude of that loss, and even harder to understand how it expects to pull itself out of this muck. Or, maybe it's not that hard. In March, Plug Power once again sold new shares to raise money -- $280 million worth. Although its cash flow burn improved by 34% in 2024 thanks to its ongoing restructuring moves, Plug Power's negative free cash flow was still over $1 billion, and it reported a net loss of $2.1 billion in 2024. Although it keeps selling shares to raise money to keep the company afloat, management has come up with another plan: Project Quantum Leap. That's the name it has given to a program of additional measures that it's planning to undertake to cut costs further, including layoffs. Plug Power expects the project to cut its annual expenses by $150 million to $200 million. Unfortunately, that doesn't seem like it would be enough to steer Plug Power out of its difficult financial situation. Given that the loan guarantee of $1.66 billion that the Department of Energy approved for the clean energy company at the tail end of President Joe Biden's administration is most likely to be canceled by President Donald Trump, I wouldn't be surprised if the company has to sell more stock to raise the money it will need to survive a little longer. If I were you, I'd steer clear of a company that's struggling to sell its products, burning cash, and diluting existing shareholders' capital through frequent share sales. Before you buy stock in Plug Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Plug Power wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $461,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $578,035!* Now, it's worth noting Stock Advisor's total average return is 730% — a market-crushing outperformance compared to 147% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Why Plug Power Stock Plunged Another 16% in March was originally published by The Motley Fool
Yahoo
24-03-2025
- Business
- Yahoo
Should You Buy Plug Power Stock While It's Below $2?
Buoyed by the post-election stock market rally, Plug Power (NASDAQ: PLUG) stock ran up to a recent high of $3.15 on Jan. 6. On that day, Plug stock closed at a price not seen since the previous summer. But it's been all downhill from there. From Jan. 6 through Plug's earnings day on March 3, shares of the hydrogen fuel producer and hydrogen fuel cell manufacturer lost more than half their value, plunging all the way to $1.50 per share. That's more or less where it is today, even after a brief post-earnings bounce. Investors have to be asking if that's it, or if Plug is going to keep moving higher. Should you rush in and buy Plug stock now while it's still below $2? Plug reported its 2024 numbers on March 3, and the news was not good. Sales of equipment (hydrogen fuel cells) plunged 45% year over year, indicating extremely weak demand for Plug's product. Fuel sales (hydrogen) grew 48%, which is great, but they grew from a much smaller base and failed to plug the gap. Plug's overall revenue collapsed, down 30% from 2023 levels. Losses grew at the gross (23% more year over year), operating (50% more), and net (54% more) levels, and Plug ended the year with $2.1 billion in losses, which worked out to $2.68 per share. This per share loss was only 16.5% worse than in 2023, true. But only because Plug issued and sold a lot of shares to raise cash and keep itself solvent in 2024. The company's share count grew by 32%, spreading losses over many more shares outstanding, thus resulting in per-share losses less than they would have been had the share count held steady. Oh, and we should probably mention why Plug needed to sell so many shares. Plug burned through just over $1 billion in negative free cash flow in 2024, consuming cash and necessitating the share sales to raise more cash. Will 2025 bring more of the same? This was the subject Plug management spent most of its time discussing in its earnings release: How does Plug dig itself out of this hole and get back on what it calls its "path to profitability?" Well, to hear Plug tell it, it's doing this already. Plug has been busy "optimizing operations, streamlining its workforce, consolidating facilities, increasing pricing on certain offerings, reducing working capital, and reprioritizing certain hydrogen and new product investments." As a result, as management points out, cash burn in 2024 was already down significantly from the $1.8 billion Plug consumed in 2023. To continue stretching the cash it has left, Plug has announced "Project Quantum Leap," which will include layoffs, consolidations, inventory reductions, capital spending reductions, and other cost-cutting that, combined, could reduce annual expenses by $150 million to $200 million. Plug has about $405 million in restricted and unrestricted cash remaining at the last report, which is actually up from 2023, a consequence of all the stock sales mentioned above. To further inflate its cash cushion, management announced Wednesday that it had sold 46.5 million more shares, bundled with 138.9 million warrants to buy shares for a de minimis price (exercisable if Plug's stock price reaches $2), for $1.51 per bundle. The $280 million Plug says it raised from this share sale should lift Plug's available cash to about $685 million. Considering all the above, let's now answer the question: Should you buy Plug Power stock below $2 a share? I say "no." Viewing all the above numbers most favorably to Plug, the $1 billion cash burn rate, the plan to reduce that rate by $200 million, and the $685 million in cash in the bank, I calculate that Plug Power will still run out of cash before the end of 2025 and will need to sell even more shares. I also note that the 185.4 million "common stock equivalents" just sold by Plug, when added to the 925.2 million shares outstanding on earnings day, will increase Plug's shares outstanding to 1.11 billion, further diluting current investors and probably pushing down the value of Plug's stock. What's more, most of this dilution will happen only if Plug Power stock hits $2 a share so that the warrants can be exercised. In other words, even assuming Plug stock ever gets back to $2 a share, the moment it does, it's going to fall back down again as a wave of new shares crushes the stock price. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $305,226!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,382!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $517,876!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 18, 2025 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Should You Buy Plug Power Stock While It's Below $2? was originally published by The Motley Fool Sign in to access your portfolio
