Entering text into the input field will update the search result below

Plug: Let's Get This Party Started

Apr. 04, 2021 1:52 PM ETPlug Power Inc. (PLUG) StockCOMP.IND161 Comments


  • Recently, Plug Power has sold-off alongside the Nasdaq and due to allegations of accounting irregularities.
  • These accounting irregularities are not nefarious and don't change the long-term prospects of the company.
  • Using EWT, I establish a price target for Plug of $239.

Electric car concept running on the road.
Photo by Jae Young Ju/iStock via Getty Images

Thesis Summary

Plug Power Inc. (NASDAQ:PLUG) has been on people’s radar in the last few months. This incredibly popular hydrogen play has been under scrutiny since it had to republish its financials

This article was written by

James Foord profile picture

James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth.

The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market update newsletter, actionable trades, technical analysis, and a chat room. Learn more.

Analyst’s Disclosure: I am/we are long PLUG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (161)

soleprop profile picture
PLUG! Is that scam still around? I'm sure I remember people losing on that one back in the dot.com era.
price target for Plug of $239? How did you come up with that? What you think Plug is like Bitcoin? Actually that is a bad comparison as Bitcoin is imaginary money created out of thing are where plug has a real product; a real expensive and inefficient product but a product no less
Stanley Cutler profile picture
To me this stock looks like a great short play. Company loses money and is projected to lose money. It has a huge accounting problem which has brought out a hoard of attorneys filing class action lawsuits against the company. With its projected continuing losses and the lawsuits for accounting fraud, Plug could well end up bankrupt. Even if the accounting issues were not intentional, it will cost Plug time, money, and resources to defend itself.
Henrik Alex profile picture
@Stanley Cutler

The company has $5 billion in cash and class action lawsuits will either be dismissed or settled at no material cost to the company.

The lease accounting errors happened because of management's hasty adoption of ASC 842 as otherwise they would have missed their own guidance by a mile once again in 2018.

Inflating gross margins by moving COGS into R&D is fraudulent but there's no chance to prove that this was not an error, too.

Anyway, the fallout from these accounting issues won't bankrupt the company.
Stanley Cutler profile picture
@Henrik Alex I don't know where you got your cash number from, but per the latest financial statements, September 30, 2020, PLUG only had $448 million in cash. Also, PLUG burns a lot of cash and relies heavily on selling its stock to have enough cash for operations. See the September 30, 2020 10-Q. www.sec.gov/...

Also, see the Liquidity note in the financial statements and Liquidity and Capital Resources under the MD&A section of the report.

I still believe PLUG could become insolvent for lack of operating cash, and the lawsuits will taint its ability to sell more stock. I remain convinced PLUG could be a good short sale candidate.
Henrik Alex profile picture
@Stanley Cutler

PLUG might very well be a good short candidate but certainly not for the reasons stated by you.

Clearly, you haven't done sufficient due diligence on the company as otherwise you would have realized that Plug Power has raised more than $4.5 billion in cash over the past six months.

While the company is expected to spend billions on capex for its business transformation, the company's current cash balance should take the company well beyond 2025.
Thanks for informative article.
Hydrogen tech overlook by EV...
Likes Toyota Vs. Tesla

‘Texas tea that is. Black gold’ is very profitable. Is this what the future holds? Or shall we wait for space aliens to deliver a new power source.
Innovation will lead to more innovation. Stay tuned.
"Much like LNG, hydrogen can be easily stored and transported"
I'm doubtful of that. The boiling point of hydrogen is -423°F, only 30° above absolute zero, so it is much more difficult to liquify and keep liquified than LNG (boiling point -260°F).

Excellent point. Department of Energy has a good explainer: www.energy.gov/...

Not as easy as LNG. But not an insurmountable problem.
@THE Value Trend "As I write this, Plug has rallied over 20% from its recent low, and I think this may be confirmation that the stock is ready to continue its previous bull run after a much-needed break."

It has had limited upside technicals after a string of downside and has now reversed that rise. Volume is low. This in not what I would call a rally. I would call it trading in a range. Or noise.

BTW, Piper just dropped valuation to $42 from $48. This may very well be a stock to get rich slowly on, but not a stock to get rich quick. One of the reasons that alternative energy stocks have trouble appreciating in price is that hype runs waaaay ahead of reality.
Henrik Alex profile picture

Come on, it has been the perfect stock to get rich quickly. PLUG was trading at $3.66 one year ago.
@Henrik Alex
It traded at $100 in 2004 and at $1500 in the dotcom bubble.

So you could get rich or poor off of this stock. But on speculative stocks, you're more likely to get poor quickly if you're trying to get rich quickly.
Henrik Alex profile picture

Not over the past twelve months. Plug Power is just one out of many examples here.
PLUG could take a hit in the next few weeks from ETF restructuring: finance.yahoo.com/...
ICLN and INRG own lots of PLUG. Although alot of the restructuring could happen in black pools and not effect the price much.
Really people! Did you folks have science in your schools? Remember any of it?

With hydrolysis you put 1 kWh in in the form of electricity and you get 1 kWh out in the form of a highly combustible (explosive?) gas. If and only if it’s 100% efficient. NOTHING IS 100% EFFICIENT, you have to put more energy in than you get out!

Just using hydro power doesn’t make this “GREEN”, nor safe, nor efficient!
soleprop profile picture
In addition to your comment above:
Most commercial production of hydrogen is extracted from fossil fuels -- all it does is move the CO2 generation to a power plant and lessen the amount of useful energy extracted from those fuels. If you want to increase the rate of global warming and climate change, hydrogen is the way to go!
The only possible way for it to be ecologically sound is through the electrolysis of water and then only if the electricity is being generated by a nuclear power plant.
Wait till you see the size and pressure of the fuel tanks these things will need to get anything more than a couple of miles down the road. Just hauling the weight of the tank will likely use a lot of the energy the fuel cells produce.
It's a stupid idea that will never happen.

@soleprop "It's a stupid idea that will never happen."

It's already happening. As with solar--or any new industry-- it will take time to lower the cost curve. But there is little question that hydrogen will be a significant storage source. As for profitability, this is to some degree an accounting issue. If fossil fuels had to pay for the wreckage that climate change causes, they would be much, much more expensive.

Also, if you had read the Wikipedia article you linked, you would note that landfill gas is already operating. That is definitely a green source, since it actually reduces greenhouse gases directly.
soleprop profile picture
You're right. Landfills are just poorly-designed bioreactors and it's better to burn the CH3 they emit into CO2 and H20 than it is to let the methane just seep into the atmosphere. CH3 is a much more potent greenhouse gas than CO2.
The author really needs to clarify what they mean by "easily stored and transported". Evidently they have no clue about what hydrogen is. It loses energy by simply sitting too long, it's highly explosive and just the very nature of hydrogen embrittlement, it can't contact any metal or else result in a catastrophic failure. LNG is far superior on the logistical front. Hydrogen has been nothing but hopium for the last 25+ years and will continue to be so.
@ruffroad They mix it with nitrogen and turn it into chlorine, then turn it back. Ships easily. Great article explains on Seeking Alpha about APD's method. I'm lucky enough to know a brilliant scientist working closely on climate change. Hydrogen is for sure the future. Europe has a hydrogen plan and making good progress, as good as these things go. Who knows how soon. But hydrogen is in the future.
Henrik Alex profile picture
@TPT Investments Tucson

Europe has announced a hydrogen strategy but there has been basically no progress on the issue since then.
@TPT Investments Tucson WTF are you talking about? You can't mix it with N2 that would dilute it and you definitely can't turn it into Cl at least not without the fusion power of a supernova. They talk about liquid H2 which is cryogenic so about -252°C.
PLUG, FCEL two losers--have been always will be, Look up the history-- FCEL has been under $2 for close to a decade.
All the hype and hope with all the pain--forget em.
orizg profile picture
@alan ljl WRONG. My 3-year TD Ameritrade chart shows that FCEL 3 years ago was at $20. Also, I have been holding and following FCEL for about 4 years and while it's true that the company has been through financial difficulties and investor pain (mine included) it has never been under $2 for 10 years. Your statement is FALSE.
Their headquarters are in Danbury area, they churn out CEO's, their factory is in Torrington. I visited and spoke to many people from the factory floor and up. I Know the manufacturing process.
Charts can be interpreted many ways-bottom line this company makes large HVAC Green Energy Products, the size that run University facilities like in New Britain at Central Connecticut University.
Any price over $5 is not from how they operate the business imho but in the Biden green energy initiatives of today and their benefiting off of that.
Believe me I also, as well as many I know who warned me, but I didn't listen either, that said "Stay away".
orizg profile picture
@alan ljl I agree with the price evaluation. This stock soared right after the election based on speculation of an hypothetical green deal. It's key to consider that while FCEL hasn't been a great performer lately, the hydrogen economy is getting more and more traction worldwide. Also, FCEL holds important patents regarding carbon capture that give the company an upper hand when countries around the world will start to adopt such technology. Exxon Mobil has been working with FCEL for some time now and I believe their agreement is about to be renewed this year and there are indications that they will continue their partnership. The FCEL current model is based on power generation so, with more plants in operation the more cash flow they'll be able to generate. In my opinion is too soon to dismiss FCEL entirely and I believe they do have a chance to participate in the hydrogen economy for the long term.
Hype Stock. And EV is killing a big market.
I owned plug back in nov -Dec 2020. Once i read that if you take the incentivized sales to Walmart and Amazon away there wasnt much ready justified market - no breadth. An article also stated that the president had a checkered past, pumping and hyping, cooking the numbers, so i sold out and have not looked back. Japan is going big into hydrogen and I would suspect that technical leadership and patents may come from there. Hydrogen has many problems too, explosive nature, hard to store, the lifecycle efficiency is rather low. I believe hydrogen will be a niche fuel but not achieve widespread adoption in USA. The risk/reward of investing in plug does not appeal to me. Buffets rule #1 "dont lose money" rule #2 'dont lose money" if you want to compound wealth.
JPM put a target of $75 on PLUG about a month or so ago, anyone have their commentary?
Henrik Alex profile picture


But that was before the accounting issues surfaced.
@Atlas44 It's normal they put a buy AFTER their clients has loaded up. Retail investors get fooled every time.
@DeepInValue come on that stuff was decades ago. Conspiracy theory guys are dinosaurs when it comes to thinking they buy first than scam u into buying ? Grow up
I invested in PLUG twenty years ago--for a short time. Same issues today. And certainly no reason to be concerned with their accounting!!! As so often happens here, we have an author hoping to create a quick pop so he can unload his dogs (no offense to dogs).
I don't understand why the companies project/fraud accounting and pay huge penalties to attorneys than giving it to sincere investors. Shameless guys
Toyota is almost giving away hydrogen cars. The hydrogen highway is dead.
orizg profile picture
@myisland You can do a lot more with hydrogen than just powering cars. FYI, the function of hydrogen is power storage and generation not fuel. Scientists, companies and universities around the world are not working against TESLA but for something way bigger than that. Once production of green hydrogen hits a price between $1 and $2 we're off the races and, at that point, oil is really dead. For good.
PLUG is touting green hydrogen - from NY hydropower. But how does this work? Niagra Falls pumps a lot of electric power into NY and the NorthEast. But this is 100% used. PLUG will not be creating any new "clean energy"; they will be taking it from other users, I assume, out-of-state users.

Can anyone in the NorthEast suddenly claim there electricity is "green"? Because they get a bill from ConEd?
orizg profile picture
@RossA Sad to see that someone who can't tell between green, grey and blue hydrogen is bold enough to publish a comment. Do your own DD first.
Well written article! Hydrogen is definitely the future. How soon it gets here is the question. Europe is studying hydrogen for power grid storage. Really focusing on the carbon free potential to power the future. Unfortunately, America is squandering a chance to lead clean energy production in the future. Instead of allowing science and technology people to create a plan, we've got a two trillion dollar grab bag of charging stations, EV production, senior housing, etc. In other words, Europe's more focused on hydrogen; however, hydrogen will get here eventually. Maybe sooner than we think, maybe not. PLUG's's potential isn't in fuel cell forklifts, it's in their plan to build hydrogen infrastructure. I've lost so much money on fuel cell specs in the past I'm leery of PLUG, but it does have kind of the feel of Cheniere Energy 15-20 years ago. A much better way to play it is APD. They're profitable with a PE of 33 and have a huge footprint in Europe. That being said, I'll probably take a small position in PLUG, if it comes down enough, and I'll probably lose money. I'm a sucker for fuel cell specs.
jpm1jr profile picture
@TPT Investments Tucson Fuel cells have been around since the 60's, and have seduced a lot of suckers
MoneyWheels profile picture
@jpm1jr Safe storage has been an issue in the past, not so much now.
soleprop profile picture
Fuel cells can make some sense, especially if they are using a bio-sourced fuel like ethanol and that ethanol is made from a trash digesting bioreactor. Making it from corn isn't a good idea at all. Corn is food and there are a lot of hungry folks out there in various places throughout the world.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About PLUG

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on PLUG

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.