The most epic rallies can often emerge from the depths of despair. This is the belief held by the steadfast investors of Plug Power (NASDAQ:PLUG) in 2024. There are no guarantees, but the coming months could see a comeback for Plug Power stock, as the company has already endured significant challenges and remains standing.
However, there’s a significant difference between mere survival and actual growth. Is it possible for Plug Power to bridge this gap? Those who are risk-tolerant and bullish about the hydrogen market may give Plug Power a chance and buy a few inexpensive shares.
In the aftermath of the Covid-19 pandemic in 2020, Plug Power stock was trading at just over $3. It rallied to $68 in early 2021, but has since returned to around $3.
This rise and fall of Plug Power’s stock is not a mere coincidence. It mirrored the path of easy-money policy followed by monetary-policy tightening in the post-Covid-19 era. Thus, if you expect a return to a more accommodating monetary policy by the Federal Reserve, Plug Power shares might be a good investment.
Plug Power issued a “going concern” warning but quickly reassured investors that the issues were resolved. Despite this reassurance, Plug Power stock has not recovered and remains down year-to-date.
This situation presents an opportunity for brave contrarians. Perhaps Plug Power no longer has “going concern” issues, but the market still lacks trust.
Reports suggest that Plug Power is finalizing a $1.6 billion loan from the U.S. Department of Energy. A capital infusion of this magnitude could finally put to rest the market’s “going concern” worries.
It’s expected that the demand for electricity in the United States will boom due to power-hungry, artificial-intelligence-based data centers.
Don’t be surprised if, in the near future, lawmakers and regulators require power-intensive businesses to use more sustainable energy sources. Clean hydrogen could be the answer, and Plug Power could benefit if hydrogen becomes a go-to power source for large-scale data centers.
Plug Power CEO Andrew Marsh has made it abundantly clear that his company is focusing on this potentially lucrative hydrogen-power niche market.
Marsh declared, “So when you look at the three major data center operators, Plug is engaged and planning some initial deployment and tests with all,” (though he didn’t actually name the data-center operators).
However, this is not expected to provide Plug Power with an immediate revenue source. Marsh acknowledged, “I don’t think it’s a 2024 event, I think it could be a late 2025 event where you start seeing some deployments at some scale.”
The market seems to be ignoring the company’s positive aspects, as Plug Power stock is significantly down. Notably, Plug Power seems to have resolved its “going concern” issues. Moreover, a more accommodating Federal Reserve policy could boost Plug Power’s revenue and profits.
Furthermore, the AI revolution will require a substantial amount of power. If businesses turn to clean-energy sources and particularly hydrogen, Plug Power could be in a prime position for a windfall. Therefore, contrarian investors might consider taking a small, speculative share position in Plug Power stock.
Let us know what you think, please share your thoughts in the comments below.
