Sell Now as PLUG Becomes Overvalued

Clear Street just downgraded Plug Power (PLUG) to “Hold” from “Buy,” warning that the hydrogen fuel cell company’s valuation has gotten stretched after a wild rally. Shares have rocketed more than 150% over the past month, crushing the Russell 2000’s modest 3% gain during the same period. The investment firm set a $3.50 price target, below where the stock currently trades, around $3.90.

The downgrade comes at a turbulent time for Plug Power. CEO Andy Marsh, who led the company for nearly 18 years, will step down next March to become executive chair. Chief Revenue Officer Jose Luis Crespo takes over as president this week and becomes CEO in the spring of 2026. Adding to the uncertainty, President Sanjay Shrestha’s abrupt resignation introduces what Clear Street calls “transition risk.”

While Clear Street still sees long-term potential in hydrogen for refineries, ammonia production, and European data centers, meaningful revenue from those opportunities won’t materialize until 2026 or later.

The firm projects revenue of $719 million for 2025, rising to $1.13 billion by 2027. Cash burn is expected to improve to $491 million this year from over $1 billion last year, but the company still faces ongoing losses and funding needs. After the recent PLUG stock surge, analysts believe most of the near-term optimism is already baked into the stock price, making it tough to justify buying at current levels.

Plug Power, a hydrogen fuel cell company, reported revenue of $174 million in Q2 of 2025, an increase of 21% year-over-year (YoY). The revenue growth was tied to strong demand across its GenDrive fuel cells, hydrogen generation, and electrolyzer platforms. The electrolyzer business stood out, as sales more than tripled to $45 million.

Notably, gross margins improved to -31% in Q2, compared to -92% in the year-ago period. This margin enhancement reflects tangible improvements from Project Quantum Leap, the company’s operational efficiency initiative.

Better service execution, competitive hydrogen pricing, and product cost reductions all contributed to the gains. Management also remains confident it can reach gross margin neutrality by the fourth quarter of this year.

Plug’s hydrogen production facilities in Georgia and Louisiana are performing well, with Georgia showing operational strength after a year of ramping up. The company has also secured a hydrogen supply agreement, which is expected to deliver substantial cost savings in the second half of the year.

Cash burn remains a concern, but it declined over 40% YoY in the first half, and management expects further improvement in the coming quarters. The electrolyzer pipeline looks robust, with several deals scheduled to close in 2025 and major contracts moving toward final investment decisions in 2026.

Recent legislation extending the 45V production tax credit and 48E investment tax credit provides long-term policy clarity that should help accelerate customer decisions. The company is targeting around $700 million in revenue for 2025 and expects to reach EBITDA breakeven by the fourth quarter of 2026.

Analysts tracking PLUG stock forecast revenue to increase from $710 million in 2025 to $1.88 billion in 2029. Plug Power is expected to remain unprofitable in the near term, and its free cash outflow is forecast to total $2.5 billion through 2028.

Plug Power ended Q2 with $140 million in cash, indicating that the company will likely need to raise capital to support its cash burn rates.

Out of the 23 analysts covering PLUG stock, five recommend “Strong Buy,” 14 recommend “Hold,” and four recommend “Strong Sell.” The average PLUG stock price target is $2.36, well below the current price of $3.90.

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com