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Plug Power: Love The Cause, Hate The Management

Apr. 04, 2021 7:31 PM ETPlug Power Inc. (PLUG)58 Comments
Wealth Insights profile picture
Wealth Insights
13.07K Followers

Summary

  • Plug Power is promising a lot, but a handful of questions cause me concern.
  • The company has strategic issues, competition from electric batteries, and recent accounting issues that put financials into question.
  • When you combine this with a sharp valuation, there is far more risk than reward in Plug Power.

Environmentally friendly solution of renewable energy storage - hydrogen gas to clean electricity facility situated in forest environment. 3d rendering.
Photo by Petmal/iStock via Getty Images

The future of energy is such an important topic for both social well being, and business reasons. It's one of the largest industries in existence, and new technologies are emerging to reduce our dependence on fossil

This article was written by

Wealth Insights profile picture
13.07K Followers
Using fundamental analysis and common sense, I provide straightforward insights on stocks and markets. https://www.threads.net/@wealth__insight- Bachelor's degree in Business Administration with a concentration in Financial Analysis. Been investing and following the markets for more than a decade.- Wealth Insights is an investor and investment author. His content is not geared to anyone's investment goals, time horizons, or risk tolerance. Content is for illustrative purposes only and is not intended to displace advice from a fee-based financial adviser. It is not to be taken as investment advice or influence investor decision-making. The accuracy of data is not guaranteed.

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Comments (58)

Invader from Earth profile picture
The photo is throwing me. What is this? Has Plug redesigned their FCs to store compressed Oxygen? Curious. Is this a Plug photo?
Henrik Alex profile picture
@Invader from Earth

SeekingAlpha only permits photos from the Getty Image database now.
Jack.Bolander profile picture
This is what I FEAR !

The Accounting Restatement is taking way too long, and the longer it takes the more worried I become.

This is what I think is happening. The restatement is BAD, not really BAD, but bad enough that Paul Middleton’s head will roll. They already know how BAD, but they want to have Middleton’s successor in place before they make the announcements: 1.) The Restatement; 2.) Middleton “Resigning”; 3.) “Please join me in welcoming, Mr. X, our new CFO”.

PLUG needs to get all of the BAD NEWS out at once.

The delay is that there is no Mr/Ms X, yet. I know the head hunters are looking, but good luck finding a qualified CFO willing to go to Latham, NY.
Until there is a new CFO hired, we won’t get the restatement.

In the meantime, the delay and attendant FEAR are weighing on the share price. JMO
Henrik Alex profile picture
@Jack.Bolander

I don't expect the restatement to be completed before Q3 but they will have to be done with it by September 13 or otherwise face delisting.
Jack.Bolander profile picture
@Henrik Alex - Agreed. Having that Dark Cloud hanging over PLUG without a positive catalyst in the meantime will be devastating to the share price. It looks like with trade on "the news" for a while.
r
I live in Europe and hydrogen is taken very serious and will be a part of the energy transition. Just like batteries are a part of the solution. Driven electric will also have a lot of inconvenient sides like charging time, pollution of batteries and range. Imagine you have to wait for 20 minutes to charge or what you see during holidays traffic jams are there before electric chargers. What will be the solution for charging your car in cities with stacked constructions? Or take a look at the industry and you want to create heat with batteries which can't be created. Or even the aviation is not logical to use batteries on short term. But there are also advantages of using electric vehicles. But what I said earlier the solution must come from both worlds.

A single point solution is also very tricky regarding managing as a country your Risks. Relying on one can make you very vulnerable. With one hack you can bring whole region down.

I think Plug Power is doing a great job and moving it's strategic direction in production, distributing and having solutions (e.g. supply chain handling, aviation and automotive). And monitoring all the negative news I can only say it's somehow shameful of what a respectful American company is. And not only in America but also in Europe and Asia it's a known organization and respected for it's knowledge about hydrogen solutions. So what is America doing to it's own business. I sometimes got the feeling but also see traces which leads to orchestrations which I noticed in certain communities to riot in chat groups and even influence newspapers, television etcetera.

Misunderstanding accounting rules is not that smart. Although it can also be a misinterpreting these rules because they are complex and are changing. I worked for very large internationals and also there were mistakes. But the main fact is regarding Plug Power is these deficiencies are not case as Fraud or other misconducts. Plug Power is an important party in changing our future and help to make this energy transition successful.

I wish you all the best in making considered choices.

René Weijer
S
I owned PLUG, BLDP, and FCELL during 1991-1996. I sold it all. All the same issues with safety and profitability drowned out the hype of hydrogen use in cars. My spin then, We weren't ready as people (industry), nor was the surrounding technology. When I hear these same dusted-off issues today, I see it as the issues being hyped this time on message boards. Honestly, I am guessing improvements have taken place, or the need to move away from fossil fuels is eminent, OR a whole new industry will employ many. Making it all worth the effort. Where will hydrogen help? For the near future, hydrogen will power (electric) commercial trucking. For example, Hyliion offers onboard generators with a choice of fuels including hydrogen recharging the truck's battery on the fly. And supplementing power grids for companies. For now, Hydrogen is less about cars. For me, PLUG management got this far, now are they able to carry on, or will they add to the board of directors or possibly pass the baton? I would like to see some insider buying begin too. And this accounting ! ugg.
Good planning and a little luck to all!
Henrik Alex profile picture
@Swot mulligan

PLUG wasn't a public company at that time.
S
@Henrik Alex
I see. I stand corrected, thank you. (time adjusted)
R
Even if Plugpower sells $ 1.7 billion in 2024, with a 21% ebitda a valuation of $ 20 billion is just too much.
Murad Shawar profile picture
@Russom at 10 dollars its worth the risk
P
Green hydrogen is a better alternative than batteries. PLUG is disruptive competition for EVs which rely on lithium and rare earths metals whose prices are soaring. Hydrogen is ubiquitous. The most common element in the universe. No shortage of hydrogen possible ever. Electricity requires millions of windmills or dozens of nuclear reactors or geothermal heat.
a
@Phil Dumfee and batteries have a toxic waste problem when they hit end of life.
Jack.Bolander profile picture
@aspexil - Batteries can be recycled.
Problem Solved.
Henrik Alex profile picture
@Phil Dumfee

Come on, lithium is actually a minor price factor for batteries relative to cobalt or nickel.

Generating green hydrogen actually requires lots of electricity.

At this point, I don't even expect fuel cells to gain meaningful market share in commercial vehicles.
D
With all the articles about Plug lately, you can tell this thing is a fish flopping around on deck looking for some water. It is at best chum for reeling in idiots to take their money.

I can wear the sucker badge because I lost money on Plug back in 2000. I was also naive enough to believe a partnership with GE had promise. What does everybody think of GE over the last 20 years?!?

The worse thing they can say to an investor is 'this time; its different'

Price target buy at $0.20 (I said 0.25 this morning, I overestimated); sell at $0.24
a
@60DegreesSouth Good luck with that prediction. I bought in at $0.92. Not looking back.
Z
@60DegreesSouth Sorry for you as a loser on PLUG, but many here got lot profits in recent months. Different time, different people.
D
@Zepher Do you really think I haven't profited this past month off Plug?!?

Until we crack the code of large scale free energy via geothermal to process and store hydrogen; fuel cells at mass adaption levels will never happen.
P
You did an excellent job of presenting the domestic, American financial argument against PLUG POWER being a solid investment; however, you did not explain why England 🇬🇧, France (RENAULT) 🇫🇷, Korea 🇰🇷, Spain 🇪🇸, Portugal 🇵🇹, and Norway 🇳🇴 feel that PLUG POWER is a sound financial investment for the future ... .😳 In the case of Korea 🇰🇷, a 50-50 partnership has been formed and will last until 2040 A.D.😐
Henrik Alex profile picture
@PHILIP TINSLEY III

There have been no investments in PLUG by any of the countries mentioned by you.

Only Korea's SK Group has invested $1.5 billion in cash recently in exchange for an almost 10% equity stake but the planned JV has not been formed yet.
P
You are absolutely wrong and if you provide Me with a direct email address, I can send you the information on the other companies in the European countries which invested in PLUG POWER ... I have been following PLUG POWER since January of 2020.
Henrik Alex profile picture
@PHILIP TINSLEY III

This will certainly be fun to read :-)

I have sent you a message but feel free to publish your list right here...
sid gold profile picture
No mention of SKI and their investment of over 1.5 billion $$ for 9.9 % of PLUG SKI is a MAJOR South Korean company with Government backing and will help turn out PLUG's H business to the Pacific Rim
Plug had also partnered with Renault for Europe

With NO debt and 5 billion in cash PLUG is a different company
Henrik Alex profile picture
@sid gold

The company has debt and is currently in default under its term loan agreement with Generate Capital due to its inability to file the 10-K.

That said, the company has no NET DEBT.
P
I hope that PLUG POWER changes accouting firms ... .😠
Henrik Alex profile picture
@PHILIP TINSLEY III

Why? It is not KPMG's fault that management faked gross margins and hastily adopted ASC 842 to avoid another guidance miss without consulting them.
s
Management has a track record of failure. Their only competence is hyping hydrogen and getting people to buy the hype. Remember, their major customers have literally gotten all of Plug’s products free and made money off of the hype. By buying plug powers products the enabled the hype that has made them billions in stock options. These guys are con artists. If Biden lost last November this company would have run out of cash.
sid gold profile picture
@smeshberg The 5 Billion in cash PLUG CURRENTLY has will not run out!!Ps NO Debt
Hugh Akston Investments profile picture
@sid gold Andy Marsh seems hell bent on spending this cash as quickly as possible. Recent cash-burning moves include: buying virtual reality glasses for employees, sponsoring a Formula 1 race car, and investing $200m of PLUG's cash into a venture capital fund. Selling equity to raise cash and then putting that cash into an investment fund is terrible capital allocation and tell you everything you need to know about management.
Henrik Alex profile picture
@sid gold

It will. As discussed above, the company has debt (and violated covenants) and FY2021 capex has been stated at $750 million. Add the $200 million from the investment disclosed today and an estimated $150 million in negative cash flow from operations, and gross cash is already down to $3.9 billion.
jfhubel profile picture
Plug Power has hurt more investors during it's rocky path forward that most any stock. The hydrogen fuel cell is iffy at best and long before this technology becomes dominant it will be replaced. Some along the way will make a few bucks but only if they know enough to bail at or near the top of a speculative runup. I have 10 shares left from an original reverse split100. I have recouped my cash using options but will pass on owning it as an investment.
v
@jfhubel the stock was around $1 a few years ago. I'm guessing that like me a lot of people have made a lot of money in this stock over the last few years.
j
@villagesgolfer "Ditto"! If you've been in Plug long enough or at least 2 years and haven't made any money, shame on you. I've been with it since 2012. Believers should have killed it and long been in on PLUG's nickle. Day traders; no sympathy or back pats here.
r
@villagesgolfer a lot of people have lost considerably investing in Plug over the past five years. Andy Marsh is reminiscent of some of the biotech hucksters ie Centocor among others who free wheeled unscathed for years. Some to this day have never brought a product to fruition. Grifters spending a lifetime on investor money.
M
Interesting piece. Plug Power has been great for me, but your look is, of course not to the past. You make a point about projections of huge growth, but then don’t point out that the company has been meeting these aggressive projections that some laughed about.

Secondly, about Tesla, you state that they have “rolled out” a Class 8 truck. As far as I know, they have not.
Henrik Alex profile picture
@Marka99

The company has not been meeting its projections for most of the past decade. Only after limiting guidance to revenues (which they really can't miss given that customers provide them with deployment schedules up to two years in advance) they managed to perform according to or even exceed projections but selling products at a loss while manipulating margins doesn't really look like a great achievement.
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