Two Green Energy Stocks Struggling to Regain Momentum
Plug Power and ChargePoint, both pioneers in the green energy sector, have left investors reeling with substantial losses. Since its IPO in 1999, Plug Power has plummeted nearly 99%, while ChargePoint has shed over 90% of its value since going public in 2021. Can these beleaguered stocks revive their fortunes?
Initially, Plug Power focused on developing hydrogen-powered residential systems, but the high production costs and infrastructure expenses forced a pivot towards hydrogen-powered forklifts for warehouses and fulfillment centers. The company managed to secure top clients like Amazon and Walmart by offering stock warrants, but this strategy ultimately led to negative revenue in 2020.
Despite a brief resurgence in revenue growth, Plug Power’s operating and net losses have continued to widen. The company’s cash reserves stand at a meager $62 million, but a $1.66 billion loan from the U.S. Department of Energy will help fund six new green hydrogen energy production facilities. This influx of capital comes at a cost, however, as Plug Power’s total liabilities will balloon to $3.45 billion and its debt-to-equity ratio will rise to 1.2.
ChargePoint, a leading builder of electric vehicle charging networks, has faced similar struggles. With over a million charging points across North America and Europe, the company has been hampered by slowing sales growth and steep losses. The broader EV market slowdown, macro headwinds, and intense competition from Tesla’s Superchargers and smaller rivals have all taken a toll on ChargePoint’s performance.
Analysts expect both companies to post declining revenue and narrowing net losses in the coming year. While Plug Power’s enterprise value of $2.5 billion may seem like a bargain, its debt burden and uncertain market prospects make it a risky bet. ChargePoint’s enterprise value of $702 million appears cheaper, but its high debt-to-equity ratio and vulnerability to Tesla’s expanding network make it an equally unappealing option.
If forced to choose between the two, Plug Power’s niche market, lower leverage, and backing from Amazon, Walmart, and the U.S. government make it the more attractive option. However, investors would be wise to exercise extreme caution before investing in either of these struggling green energy stocks.
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