Exploring Plug Power Inc.'s Growth Prospects

Plug Power Inc. PLUG has received a significant order for proton exchange membrane (PEM) electrolyzers, marking a major development in the European oil and gas sector. As a leading provider of hydrogen solutions for the green hydrogen economy, Plug Power will deploy 100 megawatts (MW) of PEM electrolyzers. These electrolyzers will be powered entirely by renewable energy sources and are expected to produce approximately 43 tons of green hydrogen per day. The purpose of this hydrogen production is to replace gray hydrogen in the oil refining process, resulting in a reduction of approximately 516 tons of carbon dioxide (CO2) emissions daily.

Plug Power's CEO, Andy Marsh, emphasized the company's pivotal role in advancing green hydrogen projects in Europe through the use of its industry-leading PEM technology. By showcasing the scalability of green hydrogen generation, Plug Power aims to support the decarbonization of challenging industries and assist companies in achieving ambitious carbon reduction targets.

The successful decision to proceed with the project's execution phase was based on the engineering support provided by Plug Power, including a Front End Engineering and Design (FEED) study. The delivery and installation of the electrolyzers are planned for 2024. Plug Power's electrolyzers utilize PEM stack technology, employing a modular design that offers a compact footprint and potential for capacity expansion. Notably, the hydrogen output of these electrolyzers can be instantly adjusted based on the electrical input, which is particularly advantageous when integrated with intermittent renewable resources.

The PEM stacks for the electrolyzer system will be manufactured at Plug Power's gigafactory in Rochester, New York. With a current capacity of 100 MWs per month, this 155,000 square foot facility is dedicated to electrolyzer stack production.

This comes as Plug Power Inc. PLUG, a global leader in comprehensive hydrogen solutions for the green hydrogen economy, has secured additional significant contracts over the last month. The company was chosen by Countrywide Hydrogen Pty Ltd, a subsidiary of ReNu Energy Limited, to provide two 5-megawatt (MW) proton exchange membrane (PEM) electrolyzer systems for green hydrogen projects in Tasmania, Australia. These systems are to be installed at production facilities in Brighton and Western Junction, contributing to the decarbonization of the road transport and natural gas sectors in Tasmania. In another notable venture, Plug Power was chosen as part of the HOPE (Hydrogen Offshore Production Europe) consortium, which received a $21.8 million grant from the European Commission. The consortium is aiming to construct a 10-megawatt (MW) PEM electrolyzer system in the North Sea, off the coast of Ostend, Belgium.

Last month, Plug Power hosted an Analyst Day at its state-of-the-art Gigafactory in Rochester, NY. During the event, the company's management team presented revenue growth opportunities in the Applications and Energy business units, along with a financial update. However, the highlight of the day was the introduction of the HL 1500, the market's first portable hydrogen refueler. Designed to cater to medium-duty and heavy-duty hydrogen-powered commercial vehicles, this self-contained fueling station on wheels offers fleet managers a cost-effective and flexible solution, reducing infrastructure costs and deployment time. With a refueling capacity of 1,500 kilograms and the ability to dispense liquid hydrogen at 350 Bar or 750 Bar pressure levels, the HL 1500 enables quick and efficient refueling compared to traditional fossil fuels. Transit agencies such as Rochester (N.Y.) Genesee Transit and San Mateo County Transit District (SamTrans) have already shown significant interest, with the first shipments scheduled to be delivered to three transit customers by the end of this year. The introduction of the HL 1500 reflects Plug Power's commitment to advancing hydrogen technology and providing practical solutions to accelerate the adoption of hydrogen-powered transportation.

Additionally, Plug Power announced changes to its Board of Directors earlier this month. Joining the Board are Patrick Joggerst and Mark Bonney, both bringing extensive backgrounds in technology transformation and executive leadership. With over 40 years of experience, Mr. Joggerst has played key roles in major technology transformations throughout his career in telecom infrastructure and services. Meanwhile, Mr. Bonney has a wealth of expertise in finance, strategy, and executive leadership, having served in various executive roles and director positions for notable public companies. Their appointments aim to support Plug Power's growth as a vertically integrated green hydrogen company. 

Looking at Quiver Quantitative’s Institutional Holdings Dashboard, we can see that hedge funds and asset managers like Blackrock, Vanguard Group, and Point72 Asset Management have all added to their PLUG positions. Most notably, Blackrock increased shares held by 3% (as filed on 03/31), bringing their total PLUG stock holdings to a whopping 52,381,858 shares worth around $636 million dollars at current market prices. For context, Plug Power has a market capitalization of $7.3 billion dollars, meaning that Blackrock holds nearly 9% of Plug Power’s market capitalization through its share holdings. 

With this in mind, we believe that it is a very interesting time to look into the fundamentals of Plug Power and see why some investors are bullish. Looking at their income statement, we can see some impressive 10-year revenue growth. Since 2013, Plug Power has grown its revenues at a CAGR of around 40%. Looking further, we can see that their balance sheet looks healthy. Plug Power holds around $475 million dollars worth of cash and cash equivalents, paired with around $1.17 billion dollars worth of short term investments. With $463 million dollars worth of long-term debt, Plug Power operates at a very healthy long-term debt to cash ratio. Additionally, we can see that the company holds a healthy goodwill to assets ratio. Since 2015, Plug Power’s goodwill has increased over 2800%, while assets have increased nearly 16000% in that time frame. With goodwill comprising 4% of the company’s total assets, we can see that Plug Power is a serial acquirer that efficiently acquires businesses to fuel its growth. 

With a book value per share of $6.61, at current market prices, the market is valuing Plug Power’s intangible assets at around $3.7 billion dollars. Plug Power operates in one of the fastest growing industries today, with the hydrogen market expected to grow at a CAGR of around 8% until 2030. With hundreds of patents and intellectual property for their hydrogen fuel cell systems and technologies, along with the explosive growth of the hydrogen industry, it can be argued that the market is currently undervaluing their intellectual property and intangible assets.

Looking at Quiver Quantitative’s Corporate Lobbying Dashboard, we can see that Plug Power has spent $900,000 dollars on corporate lobbying this year, with $480,000 of that corporate lobbying spend occurring in April. Specifically, they lobbied for tax credits aimed at hydrogen production, fuel cells, and investments, provisions related to the Inflation Reduction Act, and the allocation of funding for hydrogen and fuel cell technologies within the Department of Defense and Department of Energy. All of these issues directly affect their business model, and they are on track to spend more money than ever on corporate lobbying this year.

Keep an eye out for PLUG stock's latest news, data, and more with Quiver Quantitative.