After plunging 7% last week, Plug Power (NASDAQ: PLUG) stock has been soaring to start this week. The hydrogen and fuel cell stock climbed 13% yesterday, and it’s poised to lock in an even greater gain today thanks to the company’s announcement that it has received a government loan guarantee.
As of 10:34 a.m. ET, shares of Plug Power have ripped 34.8% higher.
Looking into the government loan
Plug Power announced today that it has received a conditional commitment for an up to $1.66 billion loan from the Department of Energy. The loan will help the company advance the development of six green hydrogen production facilities. Located throughout the United States, the facilities will supply green hydrogen to customers operating in the material handling, transportation, and industrial sectors.
Lauding the loan, Andy Marsh, Plug Power’s CEO, said: “Earlier this year, Plug successfully demonstrated our innovation and technical ability by launching the first commercial-scale green hydrogen plant in the country in Woodbine, Georgia. This loan guarantee will help us build on that success with additional green hydrogen plants.”
Plug Power has ambitions to become a major supplier of green hydrogen. With regard to its North American network, Plug Power is targeting daily green hydrogen production of 500 tons by 2025. By 2030, Plug Power is targeting daily green hydrogen production of more than 2,500 tons from its global network.
Does the new access to capital make Plug a buy?
On its surface, news of the government loan may seem like a positive development for Plug Power, and it may lead some to ponder if powering their portfolios with Plug right now is a smart idea. At this point, however, they should keep their distance and watch Plug’s story from the sidelines and consider other hydrogen stock opportunities.
The government loan may help Plug build out its hydrogen production infrastructure, but there’s no indication that the company is any closer to achieving profitability than it was before. And with profitability perpetually eluding the company, Plug should only remain on the buy list of those investors with ample tolerances for risk.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Shares of Plug Power Are Skyrocketing Today was originally published by The Motley Fool
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