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Plug Power (NASDAQ:PLUG), one of the leading manufacturers of hydrogen fuel cells, is garnering increased attention from investors as its shares have gained nearly 30 percent over the past 30 days and currently trading at a $32.02 price level.
Hydrogen’s role in the ongoing global electrification of transportation has remained quite controversial, with Tesla’s (NASDAQ:TSLA) Elon Musk terming fuel cells a “big pain in the arse”. Nonetheless, hydrogen’s proponents believe that the fuel has a critical role to play in heavy-duty transportation and in promoting the reliability of renewable energy sources by storing the excess energy in the form of readily accessible hydrogen. While much of today’s hydrogen is produced from methane reforming, the industry’s focus is to move toward green hydrogen that uses electricity from renewable sources to produce hydrogen via electrolysis – a process that splits water molecules into hydrogen and oxygen atoms. It is for this reason that Plug Power aims to build 500 metric tons of green hydrogen production capacity by 2025. However, this process to produce green hydrogen is quite inefficient, as was noted by a recent paper:
“With a hydrogen fuel cell, you must first convert the electricity to hydrogen via electrolysis, which is only 75% efficient. The gas then must be compressed, chilled, and transported, losing another 10%. The fuel cell process of converting hydrogen back to electricity is only 60% efficient, after which you have the same 5% loss from driving the vehicle motor as for a battery-electric vehicle. The grand total is a 62% loss — more than three times as much [as the loss generated from battery-powered vehicles].”
Regardless of the merits and demerits of hydrogen, the fuel clearly has a future, and companies such as Plug Power are leading the charge.
This brings us to the crux of the matter. Plug Power shares are rocketing this week on the back of a series of high-profile developments. First, Morgan Stanley upgraded the stock yesterday with a $40 share price target and an ‘Overweight’ rating. The analyst Stephen Byrd wrote in his investment note that the company has “significant upside” potential on the back of $4 billion in cash, several strategic partnerships under the belt, accelerating revenue growth, and continuing legislative support.
Next, Plug Power announced a strategic partnership with Airbus to study the potential of powering an aircraft through green hydrogen. Bear in mind that Airbus plans to introduce a zero-emissions airplane to the market by 2035.
Today, Plug Power announced its acquisition of Applied Cryo Technologies without disclosing the terms. The company also announced a 50-50 joint venture with Fortescue Future to build “a two-gigawatt factory to produce large-scale proton exchange membrane, or PEM, electrolyzers, with the ability to expand into fuel cell systems and other hydrogen-related refueling and storage infrastructure in the future.”
Additionally, Plug Power has unveiled its HYVIA hydrogen Renault Master Van H2-TECH prototype today. The van is the first-of-its-kind hydrogen fuel cell-propelled vehicle for the commercial sector, providing a range of 300 miles and over 12 cubic meters of storage space.
Finally, Plug Power has now raised its FY22 guidance, with the company now expecting to generate between $825 million and $850 million in revenue during the upcoming fiscal year, up from the previous guidance of $746 million. Crucially, by 2025, the company expects its annual revenue to compute at $3 billion.
On the back of this plethora of developments, it is hardly surprising that Plug Power shares are in the focus of retail investors today, with the stock currently featuring in the top-ranking category.