With all due respect to Prince, Great Stuff is taking over as the head of the new power generation. We’re looking for the cream of the investment crop so you can deck yourself out in diamonds and pearls … it should make you a happy boy or a girl.
Today, we have an investment opportunity with hydrogen fuel-cell king Plug Power (Nasdaq: PLUG).
Hey, um… Mr. Great Stuff. Isn’t this Reader Feedback day? Too much cruising around in your raspberry beret?
No, Great Ones, I haven’t forgotten what day of the week it is … yet. Plug Power is part of the Great Stuff Picks portfolio — one that many readers are invested in. And, the company reported fourth-quarter earnings this morning, which received a negative reaction on Wall Street.
So, before we dive into the mailbag, we’re going to take a look at Plug’s report and see just why today is an opportunity … especially for those of you that haven’t yet jumped on the Plug profit train.
Let’s start with the numbers because that’s where Wall Street has an issue:
Plug reported a loss of $1.12 per share, wider than the loss of $0.07 the consensus expected. This wider loss wasn’t the reason for PLUG’s drop.
Most investors and analysts expected earnings to come in light. Plug is spending heavily to grow its business, including ramping up production to keep up with all the deals the company is signing.
The real sticking point was the surprise negative revenue, which came in at negative $316.3 million. The consensus revenue target sat at $87.2 million.
Now, I will be the first to admit that negative revenue is bad. I have harped on lack of revenue on many, many occasions, especially when it comes to speculative plays in the alternative power market.
However, Plug’s revenue didn’t fall because it’s not selling products. It fell because the company accelerated the vesting of customer warrants. We’re not talking “Cherry Pie” or “Heaven” big-hair 80s band Warrant, either.
Stock warrants give an investor the right to buy a stock at a specific price at a specific date. These are issued directly by the company, making them different than stock options. If you want more details on stock warrants, Investopedia has a great article on them here.
Needless to say, stock warrants cost money. And that money comes off a company’s top line, i.e., their revenue. In the fourth quarter, Plug Power vested (or paid out) $456 million in warrants earlier than expected. The move was likely to get these warrants off its books so it could move forward.
Now, let’s do a little math. Plug paid out $456 million in warrants and posted negative revenue of $316.3 million. Minus the cost of the warrants, Plug’s revenue would have been $139.7 million. That’s far above the consensus revenue target of $87.2 million.
With this in mind, let’s take a final look at Plug’s quarterly report:
Earnings missed expectations because the company is spending money on growth. This is the good kind of spending, especially for Plug Power.
Revenue missed because of stock warrants but actually blew past expectations minus those warrants. This is very good for Plug Power.
The bottom line here is that today’s 10% decline is an opportunity for all the Great Ones out there that have yet to buy PLUG.
And if you’re wondering why you should buy into Plug Power, those Great Ones that bought PLUG when I recommended it back in October are up roughly 200%!
There are more gains to come as hydrogen power establishes its dominance in the new power generation. So, don’t get off this ride just yet and keep holding or buy PLUG now (if you haven’t already).
Editor’s Note: Party Like It’s 2099!
Governments around the world are pushing for greener energy sources. Still, many of have set compliance dates far into the future.
But you can’t wait years to party like it’s 2099. If you do … party over, oops, out of time!
One California company — started by one of Tesla’s original employees — may be far from a household name. But it holds all 100 patents on a “superbattery” that could power a whole American city … for free!
Remember, investing is like a party … and parties weren’t meant to last.
Alright, now that Plug Power is out of the way … let’s get to your questions!
Remember, if you’re looking for more injections, inspections, detections, neglections and selections … you can join in the “fun” by emailing me…
Read More: The Real Reason PLUG Revenue Tanked