Fuel Cells and Hydrogen: A Promising Future Ahead?
Plug Power, a leading player in the fuel cells and hydrogen industry, has made significant strides in selling its products to customers this year. However, investors have been less than impressed, with the company’s stock plummeting 43% since the start of the year, despite the S&P 500’s 24% gain.
A Critical Metric to Watch
One key metric that investors should keep a close eye on is Plug Power’s gross profit. Despite consistently failing to generate a gross profit, management is optimistic that the company will reverse this trend by the end of 2025. In a recent investor presentation, management projected a 2025 gross margin of negative 20% to negative 5%, with a positive gross margin run rate by year-end. This would be a significant improvement from the company’s negative 57% gross profit margin in 2023.
A Path to Profitability?
If Plug Power achieves its guidance, it would lend credence to management’s belief that the company will reach profitability on an EBITDA basis by the end of 2026 and positive operating income by the end of 2027. However, it’s essential to note that the company has a history of providing optimistic forecasts that haven’t always come to fruition.
A Peer Comparison
Bloom Energy, a peer of Plug Power, is already generating a gross profit and is closer to achieving positive EBITDA. This may make it a more appealing option for growth investors seeking fuel cell and hydrogen exposure with lower risk.
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