Plug Power Inc. (PLUG, Financial) has been making a big push to promote its fuel cell technology in recent years, forming several partnerships to help distribute its products. In 2022, the company hoped to continue this trend by expanding its reach into the U.S. and European markets. However, it has been unable to deliver financially in the last few quarters.
As a result, it may be best to wait on the sidelines to see whether Plug Power can deliver on its promises soon. While the company's technology has potential, it remains to be seen whether Plug Power will overcome its current difficulties and turn a profit.
A busy year
As countries around the world look for ways to reduce their reliance on fossil fuels, Plug Power is leading the charge in developing green hydrogen generation technologies. It has partnered with several leading companies in the U.S. and Europe, who are beginning to adopt its innovative fuel technology.
In 2022, Plug Power is poised to play an even bigger role in helping these companies go green. With its cutting-edge hydrogen generation systems, the company is helping to power the future with clean, renewable energy.
In July, Plug Power delivered a 3-megawatt system that uses hydrogen fuel cells to generate carbon-neutral energy for Microsoft (MSFT, Financial).
Then, in August, Plug Power partnered with New Fortress Energy (NFE, Financial) to construct a 120-megawatt industrial-scale green hydrogen facility near the Neches River in Jefferson County, Texas. The plant, which is set to break ground in the fourth quarter, will generate 50 tons of green hydrogen per day. Using Plug's proton exchange membrane electrolysis technology and additional infrastructure will make the project scalable to around 500 megawatts.
Plug Power also inked a deal in August with Amazon.com Inc. (AMZN, Financial) to provide 10,950 tons of liquid green hydrogen annually for its transportation and building operations. The supply will start on Jan. 1, 2025 and is expected to help get Plug Power closer to its goal of $3 billion in revenue by 2025.
In October, the company took a step forward in its partnership with FreezPak Logistics, a full-service cold and dry storage provider. Plug Power's signature fuel cell and hydrogen storage and fueling infrastructure will be installed and utilized at four of the company's sites that are already running, five new sites that will start up in 2023 and 400 lift trucks.
On the European front, Plug Power announced in November that it will bring on Lidl as a pedestal customer. It has installed its fuel cell systems and will continue to convert sites with the retailer well into 2023.
In August, the company also received an order from Lhyfe for 10 5-megawatt PEM electrolyzers. Taking another step in a partnership that has been in effect since 2021, Plug Power will significantly increase its presence in the European hydrogen market with this order.
Third-quarter results do not instill confidence
Despite its best efforts, however, Plug Power appears to be struggling to turn a profit.
On Nov. 8, the company reported third-quarter revenue of $188.6 million, which was up 31% year over year but missed analysts' estimates of $238.1 million by a wide margin due to supply chain issues. The loss per share of 30 cents was also bigger than the expected loss of 21 cents.
Another figure that worried investors was that shipments of GenDrive, a hydrogen-fueled PEM fuel cell system, were reduced by around 23% year over year, while hydrogen infrastructure installations were down approximately 20%.
The supply chain issues have already impacted the timeline for a few big projects. The company noted several projects that were supposed to be completed by the end of the year will now be finished in 2023.
Previously, the company issued 2022 revenue guidance of $900 million to $925 million, but later had to slash it. To fulfill the outlook, the company would need to increase its fourth-quarter sales by 75%, which some analysts find hard to believe. As evidence of promises unfulfilled, an analyst pointed to the halted order of one gigawatt electrolyze to H2 Energy Europe.
Furthermore, Plug Power initially promised to generate 70 tons per day of green hydrogen at its Georgia plant. However, throughout the year, the company kept reducing the projected tons to be generated.
These developments do not instill much confidence in the company's future.
Takeaway
Plug Power has been expanding its hydrogen generation plants and aggressively ramping up its electrolyzer manufacturing to lower the cost of production. The company has also been building stronger relationships with partners to secure a sustainable supply of green hydrogen.
Regardless of these efforts, the company has been unable to deliver financially over the last several quarters and is faced with many challenges. As such, investors might be better off waiting for conditions to improve before considering an investment in the stock.
