Daily Stock Market Reports

Why Plug Power Stock Sank Today

What happened

Shares of Plug Power (NASDAQ:PLUG) lost ground on Wednesday. The hydrogen fuel-cell company’s stock ended the day down 4.5% amid bearish pressures impacting the broader market. The S&P 500 ended the day down 1.8%, and the Nasdaq Composite index closed out the session down 2.6%. 

The market’s sell-off today seems to have primarily been driven by mounting concerns about the potential impacts of Russia’s invasion of Ukraine. With macroeconomic headwinds and rising geopolitical risk factors, growth stocks have generally had a rough go of things early in 2022, and Plug Power’s share price has slumped roughly 30% year to date. 

So what

Russian President Vladimir Putin ordered troops into the eastern Ukrainian territories of Luhansk and Donetsk on Tuesday, and it remains unclear how the situation will progress. Plug Power’s stock had actually been up as much as 3.4% earlier in Wednesday’s trading, but investors turned increasingly bearish as the afternoon progressed.

It looks like the situation in Ukraine could continue to cause markets to be choppy in the near term. 

A Plug Power hydrogen delivery truck.

Image source: Plug Power.

Now what

2022 is shaping up to be an important year for the electric-vehicle-charging company, and it’s aiming to hit electrolyzer shipments of 155 megawatts in the period. The company provided a business update on Jan. 19, and management laid out a target for sales between $900 million and $925 million this year. Looking further out, it expects to record $3 billion in sales in 2025 and record a 30% gross margin and a 17% operating margin.

After today’s sell-off, Plug Power now has a market capitalization of roughly $11.4 billion and is valued at approximately 12.6 times this-year’s expected sales. The stock is trading down roughly 63% from its 52-week high and could be poised for a rebound if the company hits its target his year.

Investors should move forward with the understanding that the company’s growth-dependent valuation sets the stage for turbulent trading amid volatile market conditions. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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