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Plug Power (NASDAQ: PLUG) stock is seeing big sell-offs in Wednesday's trading. The hydrogen power specialist's share price was down 12.4% as of 1 p.m. ET amid a 0.4% decline for the S&P 500 index and a 0.7% pullback for the Nasdaq Composite index. The company's share price had been down as much as 10.8% earlier in the day's trading.
The broader market is facing bearish pressures today following reports that President-elect Donald Trump could declare a national economic emergency in order to enact his desired tariff policies. In addition to causing investors to become more risk-averse and assign lower valuation multiples, Plug Power's business could also face significant headwinds from the tariffs.
Plug Power stock sinks on Trump tariff reports
Trump is reportedly looking to move rapidly to implement his tariff agenda when he enters office later this month. Trump is said to be considering declaring a national economic emergency in order to use import management powers granted to the president through the International Economic Emergency Powers Act.
High-risk stocks with growth-dependent or otherwise speculative valuations are getting hit particularly hard today, and Plug Power stock is being impacted by the trend. But the tariff news could also pose business-specific challenges for the company.
While it was broadly expected that Trump would implement new tariffs as president, today's news suggests that his administration's approach could be even more aggressive than previously anticipated. Plug Power is a U.S. company and has its headquarters in New York, but the company relies on components that are manufactured outside of the country. Major changes in tariff policy could make the company's path to profitability more difficult.
What comes next for Plug Power?
On the heels of today's pullback, Plug Power now has a market capitalization of roughly $2.35 billion and is valued at approximately 2.4 times this year's expected sales. That's not a hugely growth-dependent valuation, but the business is still posting big losses -- and sales performance has been heading in the wrong direction lately.
Plug Power's revenue fell roughly 12.6% year over year to $173.7 million in the third quarter. Meanwhile, the business posted a net loss of $211.2 million in the period. The loss marked an improvement from the $262.3 million loss it recorded in Q2 2024, and its margins have been improving, but the company could have trouble reaching profitability if sales don't increase significantly and pave the way for improved economies of scale. With the threat that new tariffs will further increase its costs, Plug Power could face new headwinds in the not-too-distant future.