From a business standpoint, Plug Power (NASDAQ: PLUG) has clearly succeeded this year at selling customers on the value of its fuel cells and hydrogen business. Investors, on the other hand, haven't exactly been sold on the value of Plug Power stock. While the S&P 500 has ripped more than 24% higher since the start of the year, shares of Plug Power have plummeted about 43%.
But management remains ever hopeful that the company is on the right path, and financial success is right around the corner. There are a variety of numbers that investors should keep watch over. One number that seems especially critical to monitor at this point is the company's gross profit.
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The end of 2025 could be a pivotal moment for Plug
Although Plug consistently fails to generate a gross profit, management believes that the end of 2025 will see the company reverse this trend. During an investor presentation in November, management projected that the company would report a 2025 gross margin of negative 20% to negative 5%, and it would end the year with a positive gross margin run rate. For context, Plug Power had a negative 57% gross profit margin for 2023.
Should the company achieve this guidance, it gives more credence to management's belief that the company will achieve profitability on an earnings before interest, taxes, depreciation, and amortization (EBITDA) basis by the end of 2026 and positive operating income by the end of 2027.
Is now the time to power your portfolio with Plug stock?
For those who find management's 2025 gross profit forecast inspiring, it's important to recognize that the company generally provides hopeful forecasts -- forecasts that haven't necessarily come to fruition. Those skeptical of management's guidance, therefore, are not being unfairly critical.
Additionally, it's important to recognize that Bloom Energy (NYSE: BE), one of Plug's peers, is already generating a gross profit. Moreover, Bloom Energy is considerably closer to generating positive EBITDA; thus it may appeal to growth investors who want fuel cell and hydrogen exposure, yet are similarly interested in assuming a lower degree of risk.
Should you invest $1,000 in Plug Power right now?
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Scott Levine 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
