Key points:
- A panic shift has seen a rotation towards altnerative-energy companies like Plug Power
- Soaring oil and gas prices have aligned with conversations surrounding Russian energy sourcing
- Plug's bottom-end financials are still lacking, and the Ukraine conflict is priced into shares
Green hydrogen is slowly becoming one of the most talked-about routes to renewable energy. Whilst the transition to renewables is slowly whirring away, we are still some way away from Plug Power’s vision of a hydrogen-based economy. Recently though, investor sentiment regarding renewables has witnessed a panic shift. A lot of the time, changing global trends work as powerful catalysts for market sentiment; in this case, all eyes were on the Russian invasion of Ukraine. With Russia playing an instrumental role in the gas and oil markets, it didn’t take long for buyers to rotate to alternative energy options as pressures and prices role under growing restrictions, sanctions, and uncertainty.Â
This meant that suddenly, companies like Plug Power were hot picks amongst energy investors. Despite the company still lacking promising financial hallmarks, the company saw a huge rise in attention as conversations revolving around energy sourcing grew more critical. Over March, off the back of over $100 oil, PLUG shares rose 13.1% – a welcomed turn from the company’s heavy sell-off at the end of 2021.Â
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Earnings-wise, it's a mixed bag at Plug; hence why although the company might be under the spotlight from many alternative-energy investors, there is still speculation surrounding when the company will be able to start turning a profit. In its FY21 report, Plug reported revenue of $162M, beating expectations of $157. It’s the bottom line where Plug still fails to hit the mark; reporting a Q4 EPS of $0.33, worse than analyst expectations of $0.11. Expenses and operating costs are still blocking the road to profitability, a common trait in emerging markets where the landscape and global sentiment hasn’t quite turned the corner.
Looking forward, it’s likely that Plug Power stock will sell off should global oil prices start to pull back. The Russia-Ukraine conflict is more than priced into current PLUG levels, and hence the stock could be nearing the end of its recent rally. Should the company hit its projected $900M for FY22, investors might see a more appealing EPS. However, in the meantime, we can expect sellers to return in the near future.
