Plug Power: Initiating Coverage

Ticker: PLUG

Overweight: Overweight

Price Target: $14.50

Target Date: 2/2021

Industry View: Cautious

Overview:

With Plug Power being such a highly traded stock over the last quarter, we at Moby decided to take a deeper dive into their business in order to understand their true underlying value. We have started with their recent investor day and noticed a few areas we want to highlight:

• Overall value of their fuel cell vehicle sales to Linde
• Their recent announcement of their partnership with Apex to secure cheap US renewable power, several avenues of growth in Europe, and strong progress in their electrolyzer technology. In regards to the latter, their partnership with Apex should allow PLUG to tap into very low cost renewable power on a go forward basis.  

We believe that, if PLUG can generate green hydrogen at relatively low cost, its customers (such as Amazon and Walmart, which are significant purchasers of PLUG's forklift power systems) will likely adopt PLUG's fuel cell products even more rapidly given the zero carbon profile of fuel cells that use green hydrogen (rather than gray hydrogen) as its fuel source. This would then give them the potential to scale revenue and their operations significantly.In regards to the former Linde should now have the ability to use the hydrogen it generates to fuel its fleet of vehicles.

fter speaking with some internal representatives, we believe this event has significant potential to grow PLUG's revenue to over $1.3B by 2024.Given these two massive catalysts, we've incorporated these growth metrics into our DCF model and project massive upside top-line growth potential. We therefore are assigning an initial price target of $14.50. However we remain somewhat cautious given the volatile of the name and the industry they're operating in. This should be a name to monitor for some time.