Plug Power experiences impressive stock surge – what's behind it?

After experiencing a 24% drop in August, Plug Power's stock saw a remarkable surge. The stock recorded impressive weekly gains and, according to data from S&P Global Market Intelligence, rose by 25.5% at its highest point by Friday morning. The green hydrogen industry is still in its early stages, but more and more companies and economies are recognizing the potential of green hydrogen to address the climate crisis. This week saw several significant developments in the industry that fueled investor hopes for Plug Power. Australia recently introduced a new national hydrogen strategy, comprising government incentives of over $5 billion to become a 'global hydrogen leader.' Meanwhile, India aims to become a global hub for the 'production, utilization, and export of green hydrogen.' Just a few days ago, automotive giant BMW announced plans, in collaboration with Toyota Motor, to launch a hydrogen fuel-cell electric vehicle by 2028. There is also movement on the national level: The U.S. Department of Energy (DOE) announced this week that it intends to support hydrogen production, infrastructure, and fuel cells in the United States. A few weeks ago, the DOE disbursed $62 million for 62 projects. Plug Power received a $10 million grant for a hydrogen fueling station. Additionally, this week Plug Power signed its first contract for a technical evaluation phase. Plug Power will provide technical support for H2Driven in Portugal for 25 megawatts of electrolyzers for a green methanol project. The company has set ambitious goals: Plug Power aims for an annual revenue of $20 billion and a gross margin of over 35% by 2030. However, the company currently expects revenue of only $825 to $925 million this year, compared to $891 million in 2023. An even bigger issue is financing. Plug Power is relying on a $1.66 billion loan from the DOE to build hydrogen facilities. Should the company not receive the loan, Plug Power might soon run out of money. Any rise in Plug Power's stock could therefore merely be a temporary phenomenon. Although the analysis service The Motley Fool Stock Advisor currently does not consider Plug Power to be one of the top buys, there are other stocks that promise potentially high returns—similar to what Nvidia has done since 2005.