Plug Power (NASDAQ:PLUG) stock grabbed headlines when it disclosed a major hydrogen supply deal with e-commerce giant Amazon (NASDAQ:AMZN).
The company also stands to benefit from the passage of the Inflation Reduction Act. Consequently, it makes sense for investors to consider a moderately sized position in PLUG stock.
In the world of publicly traded businesses, few names are more closely associated with the green hydrogen movement than Plug Power. Yet, investing in Plug Power has been a hit-or-miss proposition in 2022 so far.
As we’ll see, Plug Power’s financial results haven’t been perfect. Nevertheless, the company’s future prospects improve when we consider a landscape-changing new law. Besides, a recently disclosed agreement with a well-known company should benefit Plug Power and its stakeholders for a long time.
A Closer Look at PLUG Stock
There’s no point in trying to hide the brutal truth. Plug Power’s second-quarter 2022 financial results didn’t match Wall Street’s expectations. Analysts expected $159 million in revenue, but Plug Power came up short with $151.3 million. Moreover, Plug Power’s earnings loss of 30 cents per share missed Wall Street’s forecast of a 21-cents-per-share loss.
Thus, PLUG stock isn’t a perfect holding, and any long position should be moderately sized. At the same time, there are reasons to remain bullish long-term on Plug Power. For one thing, the passage of the Inflation Reduction Act is bound to benefit a fuel cell and green hydrogen supplier like Plug Power.
Among other things, the Inflation Reduction Act provides tax incentives for qualified purchases of electric vehicles (or EVs). There are also significant tax credits for qualified purchases of solar panels. Not only that, but the law provides tax credits for the costs of certain energy-efficient home improvements, as well as rebates for qualified energy-efficient appliances.
Plug Power CEO Andy Marsh went so far as to say that the Inflation Reduction Act “really has changed the landscape for both our company and others.” Marsh furthermore asserted that it “pushes our path to profitability up six months into early 2024.”
The Hydrogen Supply Deal and Plug Power
The Inflation Reduction Act isn’t the only news event that will likely move the needle for PLUG stock, however. Also highly relevant is that Plug Power inked a hydrogen supply deal with Amazon.
This is huge news, as Plug Power would be hard-pressed to find a bigger and better partner than Amazon. With this agreement, Plug Power will “provide liquid green hydrogen starting in 2025 to help decarbonize Amazon’s operations as part of its commitment to be net-zero carbon by 2040.”
The deal with Amazon makes it more realistic than ever before for Plug Power to achieve its $3 billion revenue goal for 2025. This arrangement will also keep Plug Power very busy. That’s because the company will “supply 10,950 tons per year of liquid green hydrogen to fuel Amazon operations.”
What You Can Do Now
Between the Inflation Reduction Act and the deal with Amazon, it’s tempting to go all in on PLUG stock. Certainly, a bullish case can be made now.
Yet, bear in mind that Plug Power isn’t a profitable company now. Therefore, if you choose to invest in the company, please maintain a moderate position size. Still, recent developments justify a confident stance – and excitement for the future – with Plug Power.
On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.