Why Plug Power Inc.'s Shares Dropped in August

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What happened 

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The early summer months were all about projecting a brighter future for Plug Power Inc. (NASDAQ: PLUG), but in August investors were focused on results right now. Second-quarter 2017 results were released on Aug. 8, and that's when Plug Power's stock fell, resulting in a 5.3% decline for the month, according to data from S&P Global Market Intelligence, and the company has a lot to prove in the future.

So what 

Plug Power has announced a major deal with Amazon.com and an expanded deal with Wal-Mart, but it hasn't been able to show much progress on the income statement. Revenue for the second quarter rose just 1.6% to $20.8 million, and net loss more than tripled to $42.6 million. The problem is that Plug Power can't even record a positive gross margin, and operating expenses nearly doubled to $24.5 million in the quarter. 

Plug Power has a long history of failing to live up to expectations and then being forced to issue shares to fund operations, thus diluting shareholders. Shares spiked in 2014, when the first Wal-Mart deal was announced, and since then the company hasn't been EBITDA positive, much less been able to report net income:

Now what 

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To show how weak of a negotiating position Plug Power is in, the company had to give Amazon and Wal-Mart over 110 million shares worth of warrants to sign these supply agreements. So the share count may underestimate the real future dilution if Plug Power reaches any sort of financial success. 

I have my doubts that Plug Power will be able to turn the corner to profitability, because the company has continually failed to run operations profitably. Until it reports a consistent profit, I'm out on the stock. 

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.