26.04.2022, Author: Stefan Feulner

Stock news: Plug Power - The market leader is wobbling — Prices fall despite major order

  • Hydrogen
  • Fuel Cells

The conditions for a transformation of the energy industry could not be better. With the outbreak of war in Ukraine and the declared sanctions, the switch from fossil fuels such as oil and gas to renewable energies is to be accelerated significantly once again in order to reduce dependence on Russia. Green hydrogen is seen as the key to achieving climate targets and is becoming increasingly competitive due to the sharp rise in gasoline prices. In the long term, market leader Plug Power should benefit from its green hydrogen ecosystem. Despite this, the chart is severely battered and a major correction is imminent.

Politicians focus on "freedom energies"

For Finance Minister Christian Lindner, renewable energies are "freedom energies." Robert Habeck, Germany's Minister of Economics and Climate Protection, sees the future in non-fossil energy sources: "The real path to energy policy independence is to phase out fossil energies. The sun and the wind do not belong to anyone," Habeck recently commented in an ARD broadcast. Outside Germany, too, both politics and business are focusing on climate change and the use of wind and sun. In addition to photovoltaics and wind energy, hydrogen, which can be used in a variety of ways, is considered a key element.

In order to generate electricity from hydrogen, fuel cell technology is needed. Since hydrogen does not occur in unbound form, it must first be extracted using energy. It is therefore expensive and problematic to produce and transport. Currently, 1kg still costs around EUR 9.50. The solution for a drastic medium-term price reduction lies in the production of green hydrogen. In combination with the expansion of wind and solar energy, Bloomberg NEF expects a drop of 85% in the extraction costs of green hydrogen by 2050, making the gas attractive compared to fossil fuels. However, with the sharp rise in oil and natural gas, green hydrogen is expected to become competitive much sooner.

Plug Power plans big

In the field of fuel cell technology, the US company Plug Power is considered a pioneer and market leader. Founded in 1997, the NASDAQ stock developed into a USD 12 billion corporation without once in the Company's history being in the black. However, this is expected to change drastically in the next few years. As explained in a detailed report, Plug Power plans to reach a revenue target of USD 3 billion in 2025, with a gross margin of 30% and operating income of at least 17%. So far, the Latham, New York-based company is generating significant revenue from its originating "material handling" business. This involves providing hydrogen-powered equipment such as forklifts to Walmart and Amazon and was responsible for 90% of revenues last fiscal year.

Expansion of partnership

Another contract has now been signed with Walmart for the delivery of 20t of green hydrogen for up to 9,500 forklifts at its distribution and fulfillment centers. Walmart has been working with Plug Power for more than a decade to introduce and expand hydrogen fuel cells at its facilities. In 2012, the Company began a pilot project with 50 vehicles, which grew to a fleet of 9,500 vehicles. Now, the retailer is continuing to decarbonize its operations by aiming to use green hydrogen in all of its facilities to make forklift operations more efficient, cleaner, quieter and, most importantly, more sustainable.

"Walmart has been a pioneer in innovative hydrogen and fuel cell technology for more than a decade. Our hydrogen-powered solutions provide a productivity enhancement tool for Walmart's operations," said Andy Marsh, CEO of Plug Power. Source: company news release, 4/19/2022

Walmart is one of the major customers of fuel cell manufacturer Plug Power, along with Home Depot and Amazon, and has set a goal of becoming carbon neutral by 2040. "Hydrogen is critical to building a more sustainable supply chain, and Plug Power's hydrogen solutions enable us to make further progress," said Jeff Smith, senior director of supply chain maintenance services. "Sourcing green hydrogen can help Walmart move closer to our goal of being emissions-free by 2040."

Despite a loss of more than 20% year-to-date, the chart picture remains negative. Source: S&P CapitalIQ Pro

Strong sell-off dampens the mood

The reactions of market participants to the publication of the order were extremely positive. Thus, the Plug Power share price rose to an interim high of USD 28.50, only to be drastically sold off in the wake of general market weakness due to concerns about impending interest rate hikes and uncertainties regarding the Ukraine conflict. The share price is currently quoted at USD 21.75. The value thus fell below the upward trend that had prevailed since December 2018. In addition, clearly negative divergences were formed in the indicators. The next price target is the low for the year at USD 17.51. Should this support not hold, it could go down significantly for the Americans. The next striking resistance area would then only be in the single-digit range. From a fundamental perspective, this decline would be quite understandable. Currently, the price-to-sales ratio of Plug Power is at a high 25. However, in a peer group comparison, shares such as Ballard Power or FuelCell Energy are valued even more ambitiously.

This update is based on our initial report Report 02/22.

Conflict of interest

Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

Risk notice

Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.

The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.

The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.