Plug Power Inc Shares Double -- Should Investors Buy Into the Hype?

By Motley Fool

In this segment fromMotley Fool Money, Chris Hill and Simon Erickson break down the phenomenal gains Plug Power (NASDAQ: PLUG) enjoyed last week after the company announcedthe details of a deal with Amazon,which could total $600 million over the next few years. That would effectively double currentrevenue in one fell swoop.

A full transcript follows the video.

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This video was recorded on April 7, 2017.

Chris Hill: One ofbest performing stockson the NASDAQ this week isPlug Power. Sharesof the fuel cell company rose more than50% after Plug Power announced a deal with Amazon that could reach $600 million over the next few years. That'spretty incredible if that happens, Simon, because Plug Power's market cap isn't even $600 million.

Simon Erickson: Itessentially doubled their annual revenue just inworking with Amazon for this one deal. They're big game hunting. Everyone knows Amazon -- forreference, by the way, Plug Power ismaking hydrogen fuel cells, you'regoing to be using these in the forkliftsAmazon will be using in their warehouses across thecountry, replacing battery powered forklifts. So, they're moreenvironmentally friendly,a lot of people like that they'remore efficient than batteries. So if you're a short-term trader,this is your dream come true. This is a micro cap that pops on the news of a bigcustomer that everybody knows who they are. But still,in the back of my mind,I have to go on record and say that theeconomics still suck.

Hill: For Plug Power?

Erickson: Yes. This is a business that, we saw the same thingback in February 2014,they signed a deal withWal-Mart, same kind of specific, stock popped to about $9 a share. Every year since then, thecompany has still lost in net earnings. Negative net earnings. Negativeoperating earnings and negative cash flowevery year since then. It'sstill only at about 75% down from its highs back then.I'm seeing another story play out here. Theyhave to figure out and demonstrate that they can make money in this business before I'm going to buy into the hype.

Chris Hill owns shares of Amazon. Simon Erickson owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.