Key Points
Plug Power struck a multiyear deal that will provide the company with fuel at a reduced rate.
The company said that the deal was made possible in part by recently passed U.S. legislation supporting domestic hydrogen initiatives.
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Shares of Plug Power (NASDAQ: PLUG) jumped this week, up from last Thursday’s close at 1 p.m. ET for the Fourth of July holiday by 17.5% as of 12:30 p.m. ET Friday. The spike comes as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq-100 were both up 0.5%.
The company, which develops clean hydrogen power, announced earlier this week that it secured a critical new contract that will improve cash flows, something the struggling company desperately needs.
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Plug Power has negotiated a new deal
The multiyear extension to its contract with a key, but unnamed, supplier will provide Plug Power with hydrogen fuel through 2030 at a reduced rate. The cheaper fuel will help improve Plug Power’s cash flows, which have been severely impacted by shrinking sales.
Image source: Getty Images.
Plug Power pointed to President Trump’s One Big Beautiful Bill, now law, as a key part of how the company was able to negotiate such favorable terms. In a press release, the company said that the “legislation will provide strong tailwinds in the near and mid-term for additional market growth. Plug’s expanded agreement with this partner highlights how strong U.S.-based industrial partnerships are advancing a domestic hydrogen economy to support this ongoing growth.”
However, Plug Power is a risk
Plug’s financials are in dire shape. The company’s sales have stagnated and even declined for some time as the company struggles to find a true footing in the market. For investors with a high risk tolerance and who are willing to lose their entire allocation, Plug Power could be a high-risk, high-reward speculative turnaround play. However, I would caution most investors to stay away.
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Johnny Rice 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.
