I first purchased shares of Plug Power (NASDAQ: PLUG) nearly four years ago, back in the spring of 2022. Plug Power seemed to have a lot of potential, and the company’s $14-per-share price felt quite reasonable for a long-term investor at the time. As of market close on March 9, Plug Power is barely hovering above $2. My position in Plug Power is down an excruciating 76%.
I’ve always had a healthy risk appetite when it comes to high-risk green energy investments. I’m a believer and optimist that one day our world will run on clean forms of energy only. Also, like many before me, some good investments leading up to my purchase of Plug Power gave me an inflated sense of confidence and hubris that led to overlooking a few red flags.
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Plug Power had an exciting narrative a few years ago. Government support, coupled with hype around green hydrogen, made the company look like the stock of the future. ESG and clean energy, in general, generated enormous enthusiasm in the first part of this decade.
What I overlooked was Plug’s heavy cash burn and deeply negative margins. The company was growing revenue, but costs were mounting substantially. Plug’s high overhead necessitated issuing more stock. Dilution is an investor’s worst nightmare. Plug Powernow has nearly 1.4 billion shares outstanding. Since I purchased Plug Power stock, the number of issued shares has doubled.
Plug Power is now also facing a class action lawsuit alleging it misled and misrepresented its funding and ability to build hydrogen facilities. The case has not yet been resolved.
All this being said, I still have hope for Plug Power. I haven’t had a reason to sell, so my shares sit in my portfolio at a fraction of their former value. Why do I have hope for Plug? First, because it recently appointed new leadership in Jose Luis Crespo, who was formerly the President and Chief Revenue Officer. Crespo took over as CEO on March 2. He’s a proven and effective sales leader.
Secondly, the company is showing signs of a potential turnaround. Plug Power announced an internal initiative called Project Quantum Leap early last year. The goal was to take decisive steps to improve margins and cash flows. To achieve the desired results, Plug Power is focusing on operations optimization, workforce streamlining, facilities consolidation, and pricing increases according to its latest quarterly report.
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