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Today the price of Plug Power (PLUG) stock is falling. But its recent market performance has shown that it could become the new Tesla.
Plug Power Inc. (NASDAQ: PLUG) stock managed to grow on Friday while the whole market was actively losing its value. This has led many investors to consider Plug with its stock to be the new Tesla Inc. (NASDAQ: TSLA). It has also revitalized investors’ hopes in alternative energy as a whole. Sources indicate that the stock has risen by about 20% this month. This comes after rapid growth in the value of Tesla stock as well. It is believed that alternative energy has been one of the fastest-growing sectors in this quarter.
Plug Power (PLUG) Stock Outperformed the Markets
Sources indicate that the alternative energy sector has made 40.2% gains in the past 30 days. This is far above the S&P 500‘s 1.5%. With expected earnings of about $0.06 per share, many are wondering if the alternative energy sector is overheating beyond expectation. Others are also wondering if the sector is in a bubble. The truth, however, is that the alternative energy sector is on the verge of a breakout. The stock price increases are a sign that green energy is the new cool trend that will define the next decade.
With that in mind, analysts are expecting the year-over-year growth of Plug Power to reach 25%. Revenues are expected to be up 50.71% to reach $90.15 million. Being a hydrogen fuel-cell company, this is great news for investors as Plug isn’t in direct competition with Tesla. The main partners of Plug are Amazon.com Inc. (NASDAQ: AMZN) and Walmart Inc. (NYSE: WMT). These two are already reportedly using Plug Power’s GenDrive products.
The company’s material handling sales provide a stable source of income while they get innovative with energy. This could put Plug Power in line for its goal of $1 billion in sales revenue by 2024.
Issues for the Company
On the other hand, several factors point to issues concerning Plug Power. The company’s use of lease financing is a cause for concern. Direct leasing by users of Plug Powers Products and backward financing has been seen as unsustainable. This has been seen by analysts as reducing the credit capacity of the company.
The signing of big names such as Walmart and Amazon has excited many. This has however come at a price. The issuance of warrants has become something at an issue. The dilution of stocks for business is a limited option. The company could run out of options to attract business.
While many believe in Plug Power’s hydrogen fuel cell technology, others are concerned about its internal business s practices. This gives credence to the “bubble” concerns of the company. The enormous potential of the company, however, has allowed the company to be an investor’s darling.
The downside to this though is its tactics in vendor financing for its products. At the time of filing this report, Plug Power (PLUG) stock stood at $5.15. This is a 7.61% drop since the markets opened. Will PLUG stock become the new Tesla? The time will show.