Plug Power Charges Higher On Expansion Plans

Plug Power Is The Leader In Fuel Cell Technology

Plug Power NASDAQ: PLUG just reported its fiscal Q1 results reaffirming its position as the leader in hydrogen fuel cell technology. While most of the market has been focused on electrification, EV, and self-driving vehicles Plug Power is quietly solving the problem of how to charge all those batteries. Hydrogen fuel cells. The company's GenDrive units can be used to power a vehicle directly or as part of a hybrid solution while the hydrogen infrastructure systems are perfect for larger electrical generating needs. What makes this company truly interesting, aside from its technology, is its quest to build out hydrogen infrastructure. The company is on track to build the world's largest hydrogen electrolyzer gigafactory, a move that will accelerate not only core business but peripheral markets as well.

Plug Power Rises On Mixed Results

Plug Power had a mixed quarter to be sure. While the company's earnings fell short of the consensus there are mitigating factors that include force majeure events and the company's own aggressive expansion plans. Force Majeure events created spikes in the cost of hydrogen fuel that the company's expansion plans will help correct. While we don't like to see a company lose more money than expected, the cost of hydrogen will come down and investment in the business will eventually pay for itself. The numbers we prefer to focus on now are the company's billings and revenue which show it is gaining relevancy within its end markets.

Plug Power reported $71.96 million in net revenue for a gain of 76.4% over last year and beat the consensus by 800 basis points. The revenue strength was driven by an increase in sales of both GenDrive units and hydrogen infrastructure systems. The company shipped 1,308 GenDrive systems compared to only 825 last year and 6 hydrogen infrastructure units compared to only one last year. In terms of billings, the company's gross billings improved 71% to $73.70 million.

Plug Power Is Plugging Into The Industry

Plug Power announced three major strategic partnerships over the past quarter including one with Renault, SK Group, and Acciona. The company has a memorandum of understanding with Renault Group to launch a joint venture that will provide Plug Power a platform in the European vehicle manufacturing industry. The JV is targeting a 30% market share of what it expects to be a 500,000  vehicle per year market. The deal with SK Group was formally closed in February and is intended to accelerate hydrogen as an alternative energy source in South Korea. A team has already been sent to South Korea to get this ball rolling, it is expected to launch in the second half of the year. The deal with Acciona gives the company an inroad to markets in Spain and Portugal.

The Technical Outlook: Plug Power Is In Reversal

Shares of Plug Power have been under some pressure over the past five or six months due to troubles in the greater green-energy sector and weaker than expected FQ4 results. That is over. The stock has put in a fairly clear Head and Shoulders Bottom at the $20 level and the Q1 results have shares moving higher. Today's action is confirming support at the right shoulder and suggests a full reversal is in play. A move above resistance at the $34 level will be significant and could lead to a rapid increase in share prices. In addition, there is a high 10% short interest to help drive this rally. Assuming results continue to improve over the next two to three quarters we see this stock retesting the all-time highs by the end of the year.