Can Plug Power Stock Be a 10X Investment?

Plug Power (NASDAQ: PLUG) develops hydrogen fuel cells and related hydrogen-producing systems -- technology that many observers are hopeful could help meet the world's growing energy needs. It's not a large business yet, but its opportunities are potentially massive over the long haul.

However, the business does face considerable challenges, and it has been incurring significant losses for years. The big question for investors is whether it's worth the risk. Can Plug Power potentially be a 10x investment?

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Why hydrogen energy can be a great opportunity

As the world's population gets larger and as devices and machines, including those involved with artificial intelligence (AI), demand more energy, there's a pressing need for sustainable, long-term energy sources. The hope at Plug Power is that green hydrogen, produced using clean energy sources, can be a meaningful part of the solution. And as Plug Power is still in a relatively early stage of rolling out its green energy solutions, the stock's upside could be massive.

Plug Power has been securing deals with many companies to use its electrolyzers, which use electricity to extract hydrogen from water so that it can be used as a fuel. To date, 230 megawatts' (MW) worth of its GenEco electrolyzers have been deployed. That's just a drop in the bucket relative to an electrolyzer market that could be worth $40 billion by 2032 (up from just $1.75 billion this year). If Plug Power can capitalize on that growth, it's not difficult to envision a scenario where it grows to 10 times its current value.

Why there's still plenty of risk here

Hydrogen fuel cells aren't the only option to help meet the world's energy needs. Batteries offer similar portability, and nuclear energy and other sources are already being looked at as options to add new sources to the grid. There are still many question marks to be answered in the energy sector, including which of these options will be the most practical, profitable, and sustainable.

For now, it's hard to make the case for hydrogen and Plug Power, given just how poor the company's financial performance has been. In its past four reported quarters, it has incurred a net loss of just under $2 billion. And while it has been securing new deals, its top line has been choppy. In 2024, its revenues declined by close to 30%.

A particularly troubling issue is that the company often generates negative gross margins, and it's difficult to see any path by which it could get to profitability in the near future. It has also been burning through cash, and to fund its future growth efforts, it's likely going to need to raise more money -- and that could be an ongoing challenge for some time. So the risk of dilution for its shareholders is high.

Does Plug Power have 10-bagger potential?

Hydrogen energy could be a great investment opportunity, and if Plug Power can become a profitable leader in the industry, it's certainly possible for the stock to grow to 10x its current value, especially since its market cap is just $3 billion today.

However, that doesn't mean it's a likely scenario. Ultimately, there's no certainty that hydrogen fuel cells will be an energy option that wins significantly broader adoption in the long run, or that Plug Power will be able to benefit from any trends related to the growth of hydrogen technology. The company's financials have been abysmal, and it's little wonder the stock has lost more than 80% of its value in five years. In sum, the risk here is simply massive.

Plug Power stock is an investment that's only suitable for those who have a high risk tolerance and a long time horizon, and who are prepared to withstand a lot of uncertainty and volatility ahead. I think that it's too big of a wild card today, and view it as too risky for the vast majority of investors. For most of us, taking a wait-and-see approach with Plug Power makes the most sense at this stage.

David Jagielski 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.