Should You Buy Plug Power Stock While Its Below 3 The Motley Fool

Published in Stocks and Investing on Sunday, August 3rd 2025 at 2:02 GMT by The Motley Fool
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The pure-play hydrogen power company might have a bright future.

Should You Buy Plug Power Stock While It's Below $3?

Plug Power (NASDAQ: PLUG) has long been a darling of the clean energy sector, captivating investors with its ambitious vision for a hydrogen-powered future. As a leading provider of hydrogen fuel cell systems, the company has positioned itself at the forefront of the green energy transition, supplying solutions for material handling, stationary power, and on-road electric vehicles. However, the stock's performance has been anything but smooth, with shares plummeting dramatically from their pandemic-era highs. Currently trading below $3 per share, Plug Power presents a tantalizing opportunity for bargain hunters, but it's also a cautionary tale of high-risk investments in emerging technologies. In this extensive analysis, we'll delve into the company's background, its recent challenges, the potential upside, the significant risks, and whether now is the right time to buy in.

To understand Plug Power's current predicament, it's essential to look back at its origins and growth trajectory. Founded in 1997, Plug Power initially focused on developing proton exchange membrane (PEM) fuel cells for various applications. The company gained early traction in the forklift market, partnering with major retailers like Walmart and Amazon to replace traditional lead-acid batteries with hydrogen fuel cells. This niche has been a cornerstone of its business, providing a steady revenue stream from fuel cell deployments and hydrogen supply contracts. Over the years, Plug Power has expanded its ambitions, venturing into green hydrogen production, electrolyzers, and even large-scale hydrogen infrastructure projects. The company's goal is to build a comprehensive "hydrogen ecosystem," encompassing production, storage, and distribution, which could play a pivotal role in decarbonizing industries like transportation, manufacturing, and energy storage.

The stock's allure peaked during the 2020-2021 bull market for renewable energy stocks, when shares surged to over $70 amid hype around electric vehicles (EVs) and clean tech. Investors bet big on Plug Power's partnerships, such as those with Renault for hydrogen vans and SK Group for Asian market expansion. Government incentives, including the U.S. Inflation Reduction Act's provisions for hydrogen tax credits, further fueled optimism. However, the reality of scaling up hydrogen technology has proven far more challenging than anticipated. Since its peak, the stock has lost more than 95% of its value, reflecting a combination of operational hurdles, macroeconomic pressures, and investor skepticism.

At the heart of Plug Power's appeal today is its depressed valuation. Trading below $3, the stock boasts a market capitalization that's a fraction of its former glory, potentially offering asymmetric upside if the company can execute on its plans. Proponents argue that hydrogen is poised for a breakout as the world shifts away from fossil fuels. Unlike battery-electric solutions, hydrogen fuel cells offer advantages in heavy-duty applications where range and refueling speed are critical—think long-haul trucking, aviation, and industrial machinery. Plug Power is betting big on this, with initiatives like its green hydrogen production plants. For instance, the company has operational facilities in Georgia and Tennessee, and it's planning more, aiming to produce 500 tons of liquid hydrogen per day by 2025. This vertical integration could give Plug Power a competitive edge, allowing it to control costs and supply chains in a nascent market.

Moreover, global trends support the bull case. The European Union and countries like Japan and South Korea are investing heavily in hydrogen infrastructure, creating export opportunities. In the U.S., bipartisan support for clean energy means Plug Power could benefit from subsidies and grants. The company's revenue has shown growth, with recent quarters demonstrating increased deployments in its core material handling segment. Management has outlined a path to profitability, targeting positive cash flow in the coming years through cost reductions and scaling operations. If Plug Power can hit its milestones—such as ramping up electrolyzer sales and securing more long-term contracts—the stock could rebound significantly. Analysts who are bullish point to comparable success stories in the EV space, like Tesla, where early losses gave way to massive gains as adoption accelerated.

Yet, the bear case is equally compelling and cannot be ignored. Plug Power has been a perennial money-loser, burning through cash at an alarming rate. The company has relied heavily on equity issuances to fund its operations, leading to massive shareholder dilution. Over the past few years, the share count has ballooned, eroding value for existing investors. Financial reports reveal ongoing net losses, with high capital expenditures for building out hydrogen plants straining the balance sheet. Critics argue that green hydrogen remains economically unviable without substantial subsidies, as production costs are still higher than alternatives like natural gas-derived "gray" hydrogen. Competition is fierce, with players like Ballard Power Systems, Bloom Energy, and even giants like Cummins and Toyota vying for market share in fuel cells.

Execution risks loom large. Plug Power has a history of overpromising and underdelivering on timelines. For example, delays in hydrogen plant startups have frustrated investors, and supply chain issues have hampered progress. Broader market dynamics add pressure: rising interest rates have made capital-intensive projects more expensive, while a slowdown in EV adoption has tempered enthusiasm for alternative fuels. Geopolitical factors, such as fluctuations in natural gas prices, could undermine hydrogen's cost-competitiveness. Furthermore, environmental concerns about hydrogen production—particularly if it's not truly "green" (i.e., produced via renewables)—could lead to regulatory backlash.

From a valuation perspective, while the stock looks cheap on a price-to-sales basis, it's trading at multiples that assume aggressive growth assumptions. Skeptics warn that without a clear path to breakeven, Plug Power could face further dilution or even liquidity crunches. The company's debt levels, though manageable, add another layer of risk in a high-interest environment.

So, should you buy Plug Power while it's below $3? It depends on your risk tolerance and investment horizon. For long-term believers in the hydrogen economy, this could be a compelling entry point. The stock's low price amplifies potential returns if the company turns things around—imagine a scenario where hydrogen becomes as ubiquitous as solar panels are today. Plug Power's established position in forklifts provides a moat, and its push into electrolyzers could unlock new revenue streams. However, for conservative investors, the red flags are too numerous. The path to profitability is fraught with uncertainties, and the stock could easily drift lower if execution falters again.

In weighing the pros and cons, consider diversifying within the clean energy space rather than going all-in on Plug Power. Alternatives like solar or battery stocks might offer more stability. Ultimately, Plug Power embodies the high-stakes gamble of disruptive technologies: enormous potential reward tempered by the very real possibility of failure. If you're optimistic about hydrogen's role in net-zero goals and can stomach volatility, dipping in below $3 might make sense as a speculative play. But proceed with caution—thorough due diligence and a long-term view are crucial. As the energy transition unfolds, Plug Power could either soar or continue to sputter, making it a stock that's as intriguing as it is unpredictable.

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