Hydrogen producer Plug Power (NASDAQ:PLUG) warned it as a going concern. The announcement came with third-quarter results showing , and revenue of $199 million. Plug Power ended the quarter with just $111 million in unrestricted cash.
The warning sent PLUG stock down overnight. Plug Power was due to open this morning at $3.75 per share, a market capitalization of $2.2 billion.
Pulling the Plug
Plug Power produces “green hydrogen,” gas produced without fossil fuels. It signed deals with Olin (NYSE:OLN) to produce hydrogen from alkali pits. It invested in distribution as well as production.
PLUG also sells hydrogen production equipment. Most recently, Plug Power reached a tentative deal to sell its electrolyzers to Fortescue (OTCMKTS:FSUGY), an Australian iron miner that wants to use the gas to power ships. Last month, it signed to build a “clean hydrogen hub” .
But there are many ways to get hydrogen. Hydrogen can be produced using natural gas as . It can be made from waste fuel gas as . It can also be drilled for like natural gas as . All the sources are chemically the same.
RBC Capital Markets estimates Plug Power will need $750 million over the next year to stay in business. The company is seeking a loan from the U.S. Department of Energy worth $1.5 billion and waiting on news of tax credits. It blamed that could ease toward the end of the year.
PLUG Stock: What Happens Next?
A bankruptcy would wipe out common stockholders but could let Plug Power stay in business, assuming costs ease in 2024. But there are other ways to produce hydrogen.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
