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Better Hydrogen Stock: Plug Power vs. Nikola

Plug Power (PLUG -5.29%) and Nikola (NKLA -4.21%) represent two different ways to invest in the nascent hydrogen power market. Plug Power sells hydrogen fuel systems for electric forklifts and other warehouse equipment, while Nikola develops semitrailer trucks that run on electric batteries and hydrogen fuel cells.

Both stocks initially attracted a stampede of bulls. Plug Power went public at a reverse split-adjusted IPO price of $150 in October 1999, and its stock skyrocketed to a record high of $1,498 during the peak of the dot-com bubble.

Nikola went public by merging with a special purpose acquisition company (SPAC) in June 2020, and its stock opened at a reverse split-adjusted price of $1,126.50 on the first day before hitting its all-time high of $2,391.90 over the following week.

But today, Plug Power and Nikola only trade at about $2 and $10, respectively. Let’s see why these hydrogen stocks ran out of fuel — and which one could be the better turnaround play.

Plug Power still has a lot to prove

Plug Power has severe customer concentration issues. It generates most of its revenue by selling its fuel systems to Amazon and Walmart. But to lock in those two big customers, it granted them stock warrants (options to buy more shares of the company at a discount) to subsidize the fuel cells they bought.

That loss-leading strategy caused it to report a negative net revenue of $93 million in 2020 as the costs of funding those incentives offset its customer payments. Plug’s revenue turned positive again in 2021 and subsequently rose 40% in 2022 and 27% in 2023, but its operating margins consistently withered as its net losses widened.






$502 million

$701 million

$891 million

Operating margin




Net income (loss)

($460 million)

($724 million)

($1.37 billion)

Data source: Plug Power.

To make matters worse, it delayed the filing of its annual report for 2020 and had to restate all of its financials for 2018 and 2019. Those blunders, along with the market’s waning interest in renewable energy stocks, drove away the bulls.

For 2024, analysts expect Plug Power’s revenue to only rise 4% to $926 million, its operating margin to improve to negative 89%, and its net loss to narrow to $826 million. It mainly attributes that slowdown to the macro headwinds, which are driving its top customers to dial back their big hydrogen fuel cell upgrades.

The company ended the first quarter of 2024 with only $173 million in cash and equivalents, but it recently secured a new $1.66 billion loan from the U.S. Department of Energy (DOE) to build up to six green hydrogen production facilities. That lifeline should buy it a bit more time to scale up its business, but it hasn’t proven that its business model is sustainable yet.

Nikola overpromised and underdelivered

Nikola only delivered 79 battery-powered semitrailer trucks (BEVs) and 35 hydrogen fuel cell-powered semitrailer trucks (FCEVs) in 2023. That was well below the original target of 3,500 BEVs and 2,000 FCEVs which it set during its pre-merger presentation. It also recalled nearly all of its BEVs last year after a series of widely publicized battery fires. Nikola originally aimed to generate $1.4 billion in revenue in 2023 but fell far short of that.







$51 million

$36 million

Operating margin




Net income (loss)

($690 million)

($784 million)

($966 million)

Data source: Nikola.

Nikola’s founder and former CEO Trevor Milton was also convicted of securities and wire fraud in 2022.

The current CEO, Steve Girsky, claims the company can scale up its business and generate “$150 million to $170 million” in total truck revenue in 2024. Analysts expect it to generate $126 million in revenue, with a net loss of $496 million for the full year.

That’s a grim outlook for a company that only had $346 million in cash and equivalents at the end of the first quarter of 2024. It’s also constantly diluting its existing investors with new share offerings to raise more cash. Over the past three years, Nikola increased its share count by a whopping 242% as Plug Power’s share count rose 30%.

Nikola believes it can overcome its growing pains, ramp up its production, and build more hydrogen charging stations with its partner Voltera to support its FCEVs. But just like Plug Power, there’s no clear indication that its business model can survive over the long term. Its BEVs could also face fierce competition from Tesla‘s new Semi model.

The better buy: Plug Power

Plug Power and Nikola both look historically cheap at 2 and 4 times this year’s sales, respectively. I personally wouldn’t touch either of these stocks until more green shoots appear, but Plug Power’s higher revenue, DOE lifeline, and lower valuations make it a more compelling turnaround play than Nikola right now.

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