Why I'm Watching Plug Power for a Potential Long-Term Income Pivot

Plug Power (NASDAQ: PLUG) has had its issues over the years. While the company created the first commercially viable market for hydrogen fuel cell technology, the industry has been slow to develop. As a result, the company has struggled to turn a profit over the years.

However, Plug Power has worked to turn around its struggling operations while focusing on its best growth opportunities. That's powering my interest in the hydrogen stock's potential pivot toward generating income in the coming years.

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Deep in the red

Plug Power generated $177 million in revenue during the third quarter of last year. That was only about $3 million more than it reported during the same period in 2024. The company's revenue didn't even come close to covering its operating costs. Plug Power's total cost of revenue was $297 million in the third quarter, while its net loss for the period was nearly $364 million. That was more than the $211 million net loss it posted in the year-ago period.

As a result, the company is burning through cash to fund its operations and expansion. Plug Power used $90 million in cash in operating activities during the quarter. While that was down 49% from the year-ago period, the company had only $166 million in cash at the end of the quarter, leaving its liquidity dangerously low.

The long-term pivot from loss to income

Plug Power is a long way from turning a profit. However, the company has a plan to pivot to generating income over the next few years.

Early last year, Plug Power launched its Project Quantum Leap to improve its margin and cash flow. The company aims to deliver over $200 million in cost savings by executing these initiatives. It has done that by closing facilities, securing a lower-cost hydrogen supply contract, and refinancing debt. Plug Power has also raised a significant amount of new capital that should fund its current growth plan.

The company has narrowed its focus on a few core market opportunities, including building electrolyzers and deploying its advanced fuel cells at data centers to support their power needs. These high-growth markets should deliver accelerating revenue growth and improving margins in the coming years.

As a result of these initiatives, Plug Power was on target to end last year with a neutral gross margin. That's part of its long-term pivot toward income. By the end of this year, Plug Power aims to start generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA). Meanwhile, it expects to exit next year with positive operating income and achieve overall profitability by 2028.

The long-term shift toward income

Profits have proven to be elusive for Plug Power over the years. However, the company now believes it's on the path toward generating net income within the next three years. I'll be watching this pivot closely because it could help transform Plug from a money-losing investment to a potentially powerful wealth creator in the coming years.

Matt DiLallo 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.