Plug Power Inc Soars on Acquisitions, Raises Guidance
Plug Power Inc (NASDAQ:PLUG) has been on our radar for a while now, and now it seems to be gaining traction with the rest of Wall Street. The Latham, New York-based renewable energy company has seen its share price trend steadily higher since early 2019, but PLUG stock recently got a big jolt after the company announced two strategic acquisitions.
These acquisitions also prompted the company to raise its 2024 guidance for revenue, operating income, and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA).
In the week since the company announced that it closed on the two acquisitions, Plug Power stock advanced 48%. The share price is also up 160% year-to-date and up 225% since bottoming (along with the rest of the stock market) in the mid-March COVID-19-fueled correction.
PLUG Stock Overview
Plug Power is a renewable energy company that provides hydrogen fuel cells for vehicles powered by electricity. The company’s fuel cells are used in everything from forklifts, to vans, to buses, to semi-trucks. (Source: “Five Year Plan: Growth Outlook,” Plug Power Inc, September 18, 2019.)
Fueling renewable energy vehicles takes a lot of hydrogen. In fact, Plus Power is the largest buyer of liquid hydrogen in the world. Each day, Plug Power uses 22 tons of liquid hydrogen. In 2018, the company surpassed NASA as the largest buyer of liquid hydrogen.
By 2024, the company expects that its customers will use almost 100 tons of liquid hydrogen per day. (Source: “Plug Power Inc. Completes Acquisitions of United Hydrogen and Giner Elx, Continuing to Execute on its Five-Year Plan,” Plug Power Inc., June 23, 2020.)
That’s an aggressive target, but one the company is certain it will reach. Back in September 2019, it announced a five-year growth plan, which targeted $1.0 billion in revenue, $170.0 million of operating income, and $200.0 million of adjusted EBITDA.
In fiscal 2019, the company reported full-year gross billings of $236.8 million, an operating loss of $50.0 million, and adjusted EBITDA of $9.2 million. (Source: “Plug Power Reports Record 2019, Setting Stage for a Strong 2020,” Plug Power Inc, March 5, 2020.)
The company’s record 2019 results set the stage for a strong 2020. Meanwhile, the aforementioned recent acquisitions have positioned the company to exceed its 2024 growth plan.
Acquisitions of United Hydrogen Group & Giner ELX
On June 23, Plug Power announced that it had completed the acquisitions of United Hydrogen Group Inc. and Giner ELX. (Source: Plug Power Inc., June 23, 2020, op. cit.)
United Hydrogen Group is one of the largest private liquid hydrogen generation companies in North America. The company has the capacity to generate 6.4 tons of hydrogen per day, and it is expected to expand that capacity to 10 tons per day in the near future.
Giner ELX has developed one of the world’s largest and most efficient electrolysis hydrogen generators. It also has energy storage facilities and hydrogen generation systems for fuel cell vehicle refueling stations and industrial uses.
The acquisition is expected to dramatically increase Plug Power Inc’s overall green hydrogen supply and manufacturing capabilities.
Thanks to these acquisitions, Plug Power raised its 2024 financing targets, with revenue now projected to hit $1.2 billion (up from previous guidance of $1.0 billion), operating income of $210.0 million (up from previous guidance of $170.0 million), and adjusted EBITDA of $250.0 million (up from previous guidance of $200.0 million).
Chart courtesy of StockCharts.com
In 2019, Plug Power Inc saw its share price increase by a whopping 154%. Investors were clearly hoping that momentum would carry into 2020. It did, but then it took a breather. By February, Plug Power stock had increased by 88%, enjoying the benefits of the January Effect and ongoing investor optimism.
All of that hit a brick wall in March on concerns about just how bad the COVID-19 pandemic would hurt the global economy. The correction was short-lived after the Federal Reserve and other central banks stepped in to say they would do whatever they needed in order to help avert an economic disaster.
Since March, PLUG stock has soared approximately 225%. In June alone, it climbed about 100% as more and more investors and hedge funds realized what kind of long-term potential Plug Power Inc has.
Plug Power stock has been bullish since the start of 2019, and it has been on a tear since September 2019, when the company announced an aggressive five-year growth plan.
That momentum went into overdrive when Plug Power Inc closed on two strategic acquisitions on June 23. The planned capacity addition will help the company meet the strong demand from current customers and allow it to target the growing hydrogen market, serving the steel, fertilizer, and ammonia manufacturing sectors.
Plug Power’s long-term outlook and fresh wave of investor optimism bodes well for PLUG stock over the coming quarters and years.