TLDR
- Plug Power (PLUG) stock traded between $2.45 and $2.93 on Tuesday following multiple announcements about its business strategy shift.
- The company reported third-quarter sales of $177.1 million, slightly beating Wall Street’s expectation of $176.3 million.
- Plug Power plans to sell electricity rights in New York and another location to AI data center operators for $275 million in liquidity.
- The company suspended its Department of Energy loan program activities to focus on higher-return opportunities across its hydrogen network.
- CEO Andy Marsh is being replaced next month by Jose Luis Crespo, the current chief revenue officer, after 17 years at the helm.
Plug Power stock experienced wild swings Tuesday morning as investors digested a strategic shift toward profitability and away from government-backed infrastructure projects. The hydrogen and fuel-cell company announced several changes that mark a new direction for the business.
Shares traded as high as $2.93 and as low as $2.45 before settling at $2.53, down 1.2%. The volatility came after the company released third-quarter earnings and outlined its new strategy Monday evening.
The company reported third-quarter sales of $177.1 million. Wall Street analysts had expected $176.3 million, according to FactSet. A year earlier, Plug Power reported sales of $173.7 million.
The company used $90 million in cash from operations during the quarter. It ended the period with $166 million in cash on hand. After the quarter closed, Plug raised an additional $370 million.
The real news came in the form of strategic changes. Plug Power announced it expects $275 million in liquidity from asset sales and cost reductions. The company plans to sell its electricity rights in New York and one other location to AI data center developers.
These electricity rights represent guaranteed access to power. AI data centers need massive amounts of electricity to run their operations. Companies like Amazon, Meta Platforms, Microsoft, and Alphabet are spending hundreds of billions building these facilities as fast as possible.
Plug Power will also work with data centers to provide backup power solutions. This represents a new revenue stream for the company.
Backing Away from Government Loan Program
The company made another big change. Plug Power suspended its participation in the Department of Energy loan program. The $1.7 billion DOE loan program was announced in May 2024.
The company will redirect that capital toward higher-return opportunities in its hydrogen network. Plug recently signed a hydrogen supply agreement with an industrial gas company instead. Management decided buying hydrogen was more cost-effective than building its own production facilities with government loans.
“The actions we are taking today reflect Plug’s agility and financial discipline,” said CEO Andy Marsh in a news release. “Monetizing these assets strengthens our balance sheet, while partnering on a large-scale data center development expands Plug’s reach into a dynamic, high-growth market that values reliability, resiliency, and sustainability.”
Marsh is set to be replaced next month by Jose Luis Crespo, the company’s current chief revenue officer. Marsh has led the company for 17 years.
Analyst Reactions
BTIG analyst Gregory Lewis called the asset sales “prudent” in a Monday report. He rates shares Hold and doesn’t have a price target.
Canaccord analyst George Gianarikas noted a shift in the company’s approach. “After years of constructing its infrastructure, it appears Plug Power has entered harvest mode,” he wrote. He rates shares Hold but raised his price target to $2.50 from $1.25.
J.P. Morgan analyst William Peterson praised the DOE loan decision. “Plug has sufficient internal and third-party hydrogen supply to support expected material handling demand over the next few years,” he said.
Oppenheimer’s Colin Rusch called the electricity rights deal a “clever use of assets.” He sees it as evidence the company is making progress toward profitability.
The company has spent billions building equipment and facilities to produce hydrogen gas from water and electricity. The new strategy represents a focus on making money rather than building infrastructure.
Wall Street projects the company will reach positive operating profit in 2029. Analysts expect sales of more than $1.7 billion that year, up from $700 million in 2025. Some analysts may need to update their models based on the new strategy.
Two years ago, Plug Power warned investors about “substantial doubt” in its ability to continue as a going concern. The stock hit a 12-year low of 70 cents in May. It has since climbed 241.4% from that low.
The stock is up 20% year to date through Monday’s close. However, shares are down 25% over the past month.
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