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It's incredibly light and we got tons of the stuff, so let's get cracking.
We're talking about hydrogen, of course, the lightest and most abundant chemical element in the universe — which just happens to play a vital role in creating clean energy.
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"When used alongside other technologies, such as renewable power and biofuels, hydrogen has the potential to decarbonize a whole host of industries, including some of the biggest emitters of greenhouse gases," analysts at McKinsey said in an Oct. 2 report.
Hydrogen-fuel-cell energy is a form of electricity generated through a chemical reaction between hydrogen and oxygen, and the consulting firm expects hydrogen demand is expected to grow two to four times by 2050.
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McKinsey said that this growth, while significant, is lower than previously anticipated due to fundamental cost increases, as well as to some continued uncertainty about regulation, which is delaying adoption of the technology in some regions.
"Yet hydrogen’s potential contribution to achieving net zero [emissions] is not lost on organizations and governments," the firm said.
Plug Power signs financing deal
"As of December 2023, more than 1,400 large-scale hydrogen projects have been announced globally, amounting to $570 billion in direct investments," McKinsey added. In Europe, $193 billion of investments in hydrogen projects have already been made, the consultant said.
Plug Power (PLUG) , which develops and deploys green hydrogen and fuel cell technologies, saw its shares take off on April 28 after the Latham, N.Y., company reported preliminary results and signed a deal for a secured debt facility.
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The company, scheduled to report quarterly results early next month, estimated first-quarter sales at $130 million to $134 million, bracketing the analyst consensus of $131.6 million.
Q2 revenue is expected to range $140 million to $180 million, while Wall Street is calling for $160.2 million.
In addition, Plug Power expects first-quarter net cash usage to total $142 million, a bit more than half the $268 million of a year earlier.
The company also anticipates additional near-term reductions to net cash usage driven as hydrogen plants ramp up, costs decline and prices rise.
In addition, Plug Power definitively agreed to a $525 million secured debt facility with Yorkville Advisors, a current investor in the company.
The facility includes an initial $210 million tranche, which will be fully funded at the initial closing, and additional tranches up to as much as $315 million. The initial tranche is expected to close on or around May 2.
Plug Power has been struggling, with its shares down 51% from January and off nearly 57% from a year ago.
Analyst optimistic on Plug Power cost cuts, price rises
In March, the company announced a second round of job cuts as part of its Project Quantum Leap plan.
"These decisions are not easy, but they are necessary,” Chief Executive Andy Marsh told analysts during Plug Power's earnings call.
“The slower than anticipated development in the hydrogen market has been influenced by multiple factors, including the pace of policy implementation, global energy and security driven by geopolitical conflicts, the higher cost of project execution and past over-enthusiasm in this sector.”
Marsh added that "we remained confident that hydrogen will play a critical role in the future energy mix, with many experts projecting it will eventually contribute 10% to 20% of the world's energy supplies."
At last check Plug Power's stock was up 28% at $1.04.
H.C. Wainwright reiterated a buy rating on the company with a $3 price target after the Yorkville deal was announced..
The company has been taking strategic actions across its operations and capital structure to emerge as a stronger overall business going into the second half of 2025, the firm said.
Wainwright said Plug Power's cost-cutting efforts and price increases being implemented should materially improve cash flows over the next few quarters.
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Brett Castelli, equity analyst for Morningstar, attributed Plug Power’s stock surge to the company’s statement that it did not intend to issue additional equity in 2025, given this additional financing.
He said persistent equity issuances with a declining share price have weighed on Plug shares in recent months.
The debt financing, combined with about $300 million of unrestricted cash as of March 31, "allows Plug sufficient near-term runway," he added.
"While Plug has made progress in securing financing and reducing cash burn, we await further continued profitability improvements before recommending the shares," Castelli said.
"We continue to see a wide range of outcomes for Plug, given its constrained balance sheet and uncertainty with regard to the green hydrogen market," he added. "As such, we maintain our Extreme Uncertainty Rating."
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