Plug Power’s (PLUG) recently launched partnership with NASA could significantly boost PLUG stock over the long term, while Plug’s electrolyzer business is growing very rapidly and has huge potential. What’s more, the firm is moving towards profitability, multiple institutional investors have shown a great deal of confidence in it, and its stock’s valuation is attractive.
Given all of these points, I recommend that long-term growth investors with risk tolerance consider buying PLUG stock.
Plug’s Alliance With NASA
NASA recently announced that it would purchase as much as approximately $2.8 million of liquid hydrogen from Plug Power over a five-year period.
This deal by itself won’t move the needle for PLUG and its shares. Also importantly, Plug cannot yet produce enough hydrogen to meet the needs of its customers, and the firm appears to have, for the foreseeable future, shelved its plans to build new hydrogen plants in the U.S.
Still, NASA, which uses large amounts of hydrogen, may decide to buy much more of the commodity from Plug down the road. And since the government usually pays significantly more for products than companies, Plug may be able to increase its bottom line by selling more fuel to NASA and buying additional hydrogen from third parties in order to meet its own customers’ needs.
Finally, NASA’s decision to buy hydrogen from Plug is a good endorsement of Plug’s hydrogen-generating equipment business, since Plug uses its own equipment to produce and transport its hydrogen.
Plug’s Electrolyzer Business Is Growing Rapidly and Has Huge Potential
The demand for Plug’s electrolyzers, which are used to make green hydrogen, appears to be quite strong and is expanding rather quickly. In Q3, its revenue from electrolyzers jumped 46% versus the previous quarter and 13% compared with Q3 of 2024 to about $65 million. Moreover, the firm reported that it had “advanced multiple multi-megawatt projects across Australia, Europe, and the U.S., representing more than 8” gigawatts of potential deals for its electrolyzers.
Finally, President and incoming CEO Jose Luis Crespo, speaking on the company’s Q3 earnings call, said “we are very encouraged by the progress on the 3-gigawatt Allied Green Ammonia project as it moves towards” a Final Investment Decision. Reading between the lines, it sounds like Plug is very optimistic that the huge $6.5 billion initiative, for which Plug has been chosen to supply electrolyzers, will be developed.
Meanwhile, the governments of the EU, Australia, and South Korea are providing large incentives for the use of green hydrogen, while multiple, major automakers, including BMW and Daimler, are extensively testing the efficacy of hydrogen-powered trucks, And according to one estimate, the global market for hydrogen-powered trucks will surge to $16.2 billion in 2030 from $3 billion in 2025.
Based on all of this information, Plug’s electrolyzer business looks poised to expand very rapidly over the long term.
Moving Towards Profitability and Investors’ Confidence
In Q3, the company’s net cash used in operating activities sank to $90 million, representing a very encouraging decline of 49% compared with Q3 of 2024. Further, its gross loss, excluding certain items, came in at $37 million, way down from $86 million in Q3 of 2024, and the firm expects its gross margin to at least be break even during the current quarter.
On November 18, Plug announced that it would offer $375 million of convertible senior notes “to qualified institutional buyers.” In other words, institutions agreed to lend the company $375 million, and they can choose to receive Plug’s stock instead of being repaid in cash. They can also decide to be paid back in a combination of cash and Plug’s shares.
Moreover, in Q3 institutions either held or bought over 438 million shares of PLUG stock, while only 96.5 million shares were sold by them.
All of this data indicates that many institutional investors are very confident in PLUG stock, boding very well for its outlook.
Valuation and the Bottom Line on PLUG Stock
Changing hands at a price-sales ratio of just 2.95 times, the shares appear to be greatly undervalued.
*This article is intended to be informational only; it is not financial advice.
