Plug Power (PLUG -1.23%), a developer of hydrogen charging technologies, has shed about 99% of its value since its initial public offering (IPO) in 1999. It initially planned to design and build hydrogen-powered residential systems, but that plan fizzled out and it pivoted toward selling hydrogen fuel cells and charging systems for warehouse forklifts.

That new business attracted the attention of Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT), and the two retail giants became Plug Power's two biggest customers. But it still struggled with sluggish sales growth and steep losses over the past few years, and a dimming outlook for the niche hydrogen market drove its stock to all-time lows.

Is there any hope left for Plug Power at these levels? Let's review the main reasons to buy, sell, and hold this divisive stock.

Image source: Getty Images.

The reasons to sell or avoid Plug Power's stock

The bears will tell you that, 26 years after its IPO, Plug Power still hasn't proven that its business model is sustainable. Instead, it only gained Amazon and Walmart as its top customers by subsidizing their hydrogen fuel cells with its own stock warrants -- or options to buy more of its shares at a discount.

That unusual strategy backfired when those incentives eclipsed its customer payments from 2018 to 2020. Plug Power also didn't initially properly calculate those incentives and warrants, so it had to go back and restate all of its financials for all three years. After those jarring restatements, its reported revenue actually turned negative in 2020.

Its revenue turned positive again in 2021 and grew in 2022 and 2023, but most of that growth was driven by two acquisitions that expanded its smaller cryogenic equipment unit. Meanwhile, its core hydrogen fuel cell and charging systems business struggled as macro headwinds curbed the market's demand for new hydrogen charging projects.

In the first nine months of 2024, Plug's revenue plunged as it fully lapped those acquisitions and struggled to sell more hydrogen fuel systems and charging services. Its operating margin also plummeted as it racked up alarming losses.

Data source: Plug Power. YOY = Year over year. *Due to restatements.

For the full year, analysts expect Plug's revenue to decline 21% to $705 million with a net loss of $738 million. That seems like a grim situation for a company that ended the third quarter with just $94 million in cash and equivalents.

It's also nearly tripled its number of outstanding shares over the past five years, and it will likely continue to dilute investors with its secondary offerings and stock-based compensation.

The reasons to buy and hold Plug Power's stock

On the bright side, the bulls expect Plug's declines to bottom out this year as the macro environment stabilizes. Analysts expect its revenue to grow 35% to $954 million in 2025 as it more than halves its net loss to $342 million. With an enterprise value of $2 billion, Plug looks undervalued at just over 2 times this year's sales -- especially if you expect its business to warm up again as more companies resume their hydrogen projects.

As for liquidity, Plug finalized a $1.66 billion loan guarantee from the U.S. Department of Energy last month to finance its construction of six green hydrogen manufacturing plants. That lifeline should prevent its coffers from running dry as it waits for the hydrogen market to heat up again. It's also been pruning its workforce and selling some of its equipment (and leasing it back) to stabilize its cash flows.

Plug Power's stock has been stuck in a rut for years, but its insiders notably bought 12 times as many shares as they sold over the past 12 months. That warmer insider sentiment suggests it could finally be poised for a roaring comeback.

Lastly, Plug Power remains the clear leader of the nascent hydrogen fuel cell and charging market. It's already deployed over 69,000 fuel cell systems and more than 250 fueling stations worldwide, and it's the single largest buyer of liquid hydrogen. So assuming more companies finally adopt hydrogen fuel cells -- which have zero emissions and can be charged more quickly than traditional lithium ion batteries -- Plug Power's sales and profits could skyrocket over the next few decades.

Is now the right time to buy, sell, or hold Plug Power?

If you already own Plug Power's stock, it doesn't make much sense to sell it at these depressed levels with those potential catalysts on the horizon. But it also wouldn't be prudent to aggressively buy more shares before some more signs of a turnaround appear. So for the time being, I think investors who already own Plug should simply hold their shares, while investors who don't own it should only nibble on it as they monitor its progress.