I’ve been seeing this new ad for a month or so… it’s from Alex Reid, who is selling a new service called Wealthpin Pro ($49/yr), and the tasty bait he dangles is a special report called Ride the Future Fuel Revolution which is all about a “tiny company” that he says has “just developed a brand new type of fuel that could put Tesla out of business.”

I’ve never heard of Reid before, looks like he got his start in copywriting like a lot of investment newsletter folks, but he’s treading some well-worn ground with that Tesla comparison. Pretty much every “alternative fuel” or “better battery” stock in the past five years has been sold as the idea that’s going to kill Tesla, so we should start off with a big ol’ spoonful of skepticism… but let’s see what he’s teasing. This seems to be his first big teaser pitch, he doesn’t have a track record in public stock picking, but we’re still curious.

Here’s a bit of the ad to get us started:

“Forbes, CNN, and even prestigious scientific journals like Nature are calling this company’s new fuel: ‘The fuel of the future.’

“That’s because it’s not only revolutionizing cars with affordable, efficient, and 100% clean energy…

“It could soon power EVERYTHING—from trucks, ships, and planes… to entire industries like steelmaking and chemicals production… and even our homes.”

And the potential gain teased is, of course, ludicrous…

“… by getting in on the ground floor of this new energy revolution…

“You can tap into this giant pool of money and potentially claim a 46,700% gain over the coming months.”

Umm, no. You’re not going to get a 46,700% gain “over the coming months.” But I guess that makes it past the lawyers OK, since “over the coming months” doesn’t really mean anything. You might hear that as six months, and that’s certainly what the ad copywriter is hoping you’ll be thinking, but the lawyers could just as easily say that it means 11,000 months. Phrases that have no actual definition, but which conjure up sexy promises, are what teaser ads are all about.

There are crazy gains in stocks sometimes, for sure — the example he conjures up is Enphase Energy (ENPH), which, according to his chart, rose 46,193% from its all time lows to its all time highs. That would require some superhuman luck, of course, since you would have had to buy when the company had a market cap of down near $10-15 million and somehow resist selling as it doubled and doubled and doubled… AND resist selling when it then lost ~90% of its value in a collapse in 2015 (or during the 40%+ drops in the share price in recent years). Still, if you’ve held Enphase for at least a few years, as demand for their solar microinverters has soared, you’ve done well, it’s got a total return of close to 10,000% over the past five years.

Tesla (TSLA) itself is another example given, too, that was at a 24,000% gain at the all-time highs, assuming you bought at the 2010 IPO… though certainly that has had some huge swings up and down over the years as well, and despite it’s popularity it also spent 4-5 years essentially sitting still before the stock exploded a few years ago. And yes, that has been an extraordinary long-term investment, even if that’s thanks almost entirely to the explosion in production and investor interest in 2019, and the stock is a disappointment to anyone who bought during the past couple years. There’s no direct connection between Enphase and the solar market and this “alternative fuel” they’re pitching, of course, and the connection to Tesla is very theoretical… but investors do tend to put all “green” investments together.

So what’s this alternative fuel? Here’s the big-picture:

“… unlike all the other forms of renewable energy, this Future Fuel can ACTUALLY generate reliable power 24/7, regardless of whether the sun is shining or the wind is blowing…

“And in contrast to nuclear energy, which has dangerous radioactive waste, its only byproduct is WATER.

“Even more impressive is that while battery-powered electric vehicles can take half a day to charge, this fuel refills cars in three minutes flat—240x faster!

“So forget Enphase, forget NexGen, and forget Tesla.

“Because there’s only ONE company leading the Future Fuel revolution…

“And for reasons you’ll discover in just a moment, I expect this tiny company to hand early investors a return EVEN BIGGER than Tesla, Enphase, and NexGen did.

“It’s already making investors rich, giving them the chance to nearly double their money in the past couple months alone.”

And the ad includes a chart, which will be helpful in confirming the Thinkolator’s answer — in broad strokes, it just shows that the stock popped from $15-30 in July and August of last year.

We also get a few hints about other big investors who are on board…

“… stock market legends like David Shaw, who has invested $166 million.

“Jeff Yass—another legendary multibillionaire investor—has an $85 million stake.

“And some of the largest institutions in the world are gobbling up shares too, including Morgan Stanley, Vanguard, and BlackRock for an enormous $2.7 BILLION.”

OK… so that means this is a pretty big company. Vanguard and Blackrock are the dominant index fund managers, so they’re not “stock pickers” who are identifying exciting ideas and their ownership doesn’t signal anything specific about the company… but if they together own $2.7 billion, it means we’re probably dealing with a company that has a market cap of at least $10 billion or so.

And what is this “future fuel” they’re talking about? Well, no big surprise here (particularly after he mentioned that the byproduct is water), he’s talking up hydrogen… which has been among the more popular “future fuel” dreams for about 200 years, since the days when we were using whales for light and coal for warmth. Here’s a good sum-up from a Hagerty article (that’s a classic-car business, built around insurance and preserving “car culture”, so they obviously have a different perspective):

“Hydrogen is the perfect fuel. For a start, it’s the most abundant element in the universe, so we’ll never run out of it. If you burn it in a combustion engine or feed it to a fuel cell the only byproduct is water.

“So why haven’t we been driving hydrogen-powered cars and flying in hydrogen-powered planes for decades? Big-oil conspiracy theories aside, there are a few issues with H2.

“It may be quite literally everywhere, but extracting it isn’t that easy. The most straightforward way is to split water (H2O) into hydrogen and oxygen using electrolysis. However, to do this at any practical scale requires a lot of electrical energy, which has to come from somewhere—preferably from a renewable source such as solar, wind, or wave power. If the electricity isn’t sustainable, then the net environmental benefits of hydrogen are negated.

“Next up is the problem of storage. Hydrogen is the lightest element and has a tendency to escape its confines. The solution so far has been to compress the gas into liquid form and store it in high-pressure tanks. In theory, “pellets” of solid ammonia borane, which are capable of storing hydrogen, could also release the gas in situ through a catalytic reaction.

“Finally, there’s the Hindenburg effect. It may have been 85 years ago but newsreel footage of the world’s largest airship going up in flames is one of the most enduring images of the 20th century and and still conjured in the minds of many at the merest mention of hydrogen.”

We’ve had hydrogen-fueled experimental vehicles and concept cars for decades, both hydrogen combustion cars and hydrogen fuel cells, but none of them have really taken off… in some ways, it’s similar to the challenge of electric cars, since we’ve seen that EVs have only really started to take off now that there is some meaningful recharging infrastructure built out to give buyers some confidence (pioneered, of course, by Tesla).

So… which company in this hydrogen space is Alex Reid talking up? He’s specifically talking “green hydrogen,” which just means that the hydrogen is extracted from water using renewable electricity to break the hydrogen/oxygen bond (most hydrogen is decidedly un-green, it’s usually produced using natural gas). Similar to the way that “green ammonia” has been talked up as an environmentally friendly fuel or fertilizer. Using electricity to create a combustible liquid fuel is a good way to make solar or wind power portable (or more easily stored), which is at the heart of a lot of grid storage strategies, and it also offers a much easier refueling strategy for transportation. As long as it takes over an hour to recharge a car battery even with the highest-speed chargers (which are rare), the temptation of hydrogen fuel cells or hydrogen tanks that can be “topped up” like gas tanks in five minutes will have at least some appeal.

The dream of hydrogen investors is that so many of the big consumers of fossil fuels (coal, oil and gasoline) can theoretically have their needs met by hydrogen instead, since it can spin electric turbines like natural gas and also be burned very hot like coal (for steel and cement plants).

But the enduring dream is really automobiles — that’s where the “peeing car” image comes from, by the way, the only real commercial scale hydrogen vehicle is the Toyota Mirai, a hydrogen fuel cell sedan which was introduced in 2014 (Honda and Hyundai have similar models these days, but Toyota has led the way). The fuel cell discharges (clean) water as it uses hydrogen, and that becomes a fun novelty of the car because you can press a button to “purge” that water if you want to do so to amaze your friends and fellow travelers (otherwise it does so automatically when it needs to, which is way more boring).

You probably haven’t seen one, though, especially if you don’t live in California — they’ve sold about 20,000 of them over the past nine years, about half in California and most of the rest in Japan, and the infrastructure remains extremely limited. There are about 40 publicly available hydrogen refueling stations in the US that Mirai owners can use, and 90% of those are in California (logistically it’s like a gasoline car, it takes about five minutes to “fill up” and a full tank of hydrogen will probably last 300-400 miles. I don’t know what it costs to refill your hydrogen tank, I would assume it’s much more than gasoline if unsubsidized, but presumably the costs will go down as capacity increases, and it is at least slightly more involved than a gasoline refill — the hydrogen tanks are under high pressure, so you have to be a little bit careful (we’ve all seen those videos of idiots smoking at the gas pumps and setting the building on fire, however, so “a bit careful” might be good advice for those of us who take dangerous gasoline vapors for granted). Driving-wise, it’s like an electric car, the fuel cell powers electric motors that turn the wheels.

And that’s the real challenge, of course, hydrogen cars work very well and are green and can be at least as efficient as gasoline cars in terms of refueling needs… but they don’t make sense until there’s infrastructure to support them. Even early adopters aren’t likely to build their own electrolyzer in the garage to create hydrogen and let them refuel at home, like essentially every EV owner does (it’s possible, and there are home electricity storage systems that are built around hydrogen electrolysis and storage, but not easy, not sure if it’s practical for refueling cars)… and it is a LOT easier for the government to push EV chargers than to push hydrogen refueling stations (installing even a high-speed level-3 charger would probably cost about $40,000, with prices coming down quickly, and those can be slapped in your back yard or in a shopping mall parking lot without major safety worries… building a new hydrogen refueling station would cost millions, and would surely make the neighbors nervous).

Since there’s a dramatic need for more EV charging, and a huge push from the government to build more high-speed chargers, it’s a little hard to imagine a massive infrastructure push for hydrogen refueling, too, that would let that fuel start to make a dent… but you never know. For context, there are about 40 hydrogen refueling stations in the US, compared to 115,000 gas stations. For electric vehicles, the last count I saw was 125,000 level 2 EV chargers, and 25,000 level 3 chargers (and about 17,000 Tesla Superchargers, at about 1,500 different locations).

The temptation, both economically and politically, is clearly to double down on charging rather than to push on that number of hydrogen stations. Green hydrogen is a part of the recent green infrastructure spending, the Department of Energy is planning to spend $9.5 billion on “clean hydrogen initiatives”, including $8 billion for regional Hydrogen Hubs, though those are more focused on industrial use than transportation… so there is money going into hydrogen, but when it comes to cars, the Federal focus seems to be on building out 500,000 more EV chargers, using ~$7.5 billion in federal money over the next five years.

But hope springs eternal. Maybe enough big trucking fleets will convert to hydrogen to justify the buildout, or maybe Toyota will continue to push — even if they do have a bit of egg on their face after betting on hydrogen over batteries a decade ago and squandering the early lead they might have built with the Prius.

So what’s our secret hydrogen company? Here are your clues…

“… it’s PERFECTLY positioned to benefit from the billions—and soon TRILLIONS—of dollars flooding into green hydrogen market.

“You see, this company has been in business for over two decades…

“Forming strategic relationships with some of the largest companies in the world…

“Establishing itself as the leading developer of the electrolyzers that produce green hydrogen from water…

“And making smart acquisitions, one after another to become the ONLY company in the world controlling the entire green hydrogen value chain… from production, to distribution, and even the hydrogen technologies it sells directly to customers.”

Other hints…

“80% of this company’s customers are blue-chips…

“In 2021, it made tens of millions of dollars selling green hydrogen to customers around the world….”

The company also makes hydrogen fuel cells, we’re told…

“Fuel cells turn hydrogen into 100% clean electricity for hydrogen-powered cars, trucks, forklifts, ships, and now even planes.

“As a result, this piece of tech is a HUGE cash cow for this company…

“Bringing in sales of $470 million in 2021…

“And by 2025, this number is expected to more than triple to well over a billion dollars.”

So it’s a company that at some point in the past few months has had a valuation of $14 billion, and has trailing revenues of “just over $500 million” … and the ad says that it’s a “perfect time to buy” with the shares near $15.

So what’s the stock? This is the oft-promoted hydrogen pioneer Plug Power (PLUG), which has been through a few hype cycles over the past 20 years but hasn’t yet been able to establish a growing or profitable business — here’s what that looks like on the stock chart, that’s their share price in purple, and PLUG’s annual revenue per share in orange:

Earnings are negative for PLUG, so I can’t show those on this comparable percentage basis, but the annual net loss was generally in the $50-100 million range for most of their history, before soaring to about $700 million a year since COVID hit. Earnings per share didn’t fall quite as dramatically, though that’s mostly just because they spread out the losses over a much larger number of shares (they have raised capital several times in the past five years, almost tripling the share count). Here’s that chart, that’s PLUG’s net income (loss) in purple with the share count in orange.

I’m coming in with a bias here, because I’ve seen Plug Power promoted many times in the past ten or fifteen years, and most of the time it has just looked like a puffed-up story stock. It may well be that the company can get more “real” now, pushed in part by some infrastructure spending on hydrogen, but I’m likely to be extra skeptical. If you want some reason for hope, it’s not in the per-share numbers — for hope, you have to look at the top line revenue. They’re still spending a lot more than they take in, and their gross margin is not yet improving (on average, the equipment they sell costs them 25% more to make than they can sell it for), but the sales are at least growing, and have returend to a pretty clear growth trend after the COVID dip — here’s what that top-line revenue looks like over the past five years, in orange (share price in purple):

Here’s how the company describes itself:

“Plug Power is building the hydrogen economy as the leading provider of comprehensive hydrogen fuel cell (HFC) turnkey solutions. The Company’s innovative technology powers electric motors with hydrogen fuel cells amid an ongoing paradigm shift in the power, energy, and transportation industries to address climate change and energy security, while providing efficiency gains and meeting sustainability goals. Plug Power created the first commercially viable market for hydrogen fuel cell (HFC) technology. As a result, the Company has deployed over 60,000 fuel cell systems for e-mobility, more than anyone else in the world, and has become the largest buyer of liquid hydrogen, having built and operated a hydrogen highway across North America.

“Plug Power delivers a significant value proposition to end-customers, including meaningful environmental benefits, efficiency gains, fast fueling, and lower operational costs. Plug Power’s vertically integrated GenKey solution ties together all critical elements to power, fuel, and provide service to customers such as Amazon, BMW, The Southern Company, Carrefour, and Walmart. The Company is now leveraging its know-how, modular product architecture and foundational customers to rapidly expand into other key markets including zero-emission on-road vehicles, robotics, and data centers.”

And they do think that growth will continue — their target for 2023 is revenue of $1.4 billion, which would be 65% growth, and they think they’ll get to a “break even margin” by the end of the year, which would be a big leap forward for them. And they think they can get to $5 billion in 2026 revenue, with an operating margin of 17%.

The company today is still primarily driven by their “materials handling” business, which is essentially selling hydrogen fuel cell forklifts and local refueling infrastructure to large warehouse operators. They made a big deal with Amazon recently, so that has gotten some attention, and they’re actively trying to expand into other parts of the hydrogen economy — electrolyzers, on-road mobility (cars and trucks, not just forklifts), and energy storage (“stationary power,” they call it), with some new plants to increase their output of fuel cells and electrolyzers, and new deals to create regional hydrogen refueling centers that can serve a variety of warehouse/forklift customers. If you go by their latest investor letter, it sounds like things are getting much more impressive, with blue skies ahead.

Analysts are reasonably optimistic as well — the skeptic will note that investment banking analysts often love companies that hire investment banks to sell tons of shares, but there are a lot of analysts and they see substantial revenue growth, and a company that might almost break even in 2024. They’re predicting that PLUG will lose 60 cents a share this year on $1.37 billin in revenue, but will also grow revenue by another 50% in 2024 and get to a loss of only seven cents a share. They do have enough cash to invest in that growth — they’re sitting on about $2.7 billion in cash and don’t have much debt, so even if they keep up the accelerated investment path they’ve been on over the past year or so, that cash should last about two years. Their capital expenditures are big as they try to ramp up their hydrogen ambitions, so things could change, but they’re at least not financially constrained right now.

And with that, I’ll leave you to it — this is still very much a story stock, as has been the case for 20 years of hydrogen hopes, so I’m still inclined to be skeptical… but there is, at least, some evidence that the story is more reality-based than it has been in past hype cycles. Feel free to talk me out of my skeptical stance, or share whatever other opinion you might have about Plug Power, with a comment below. Thanks for reading!

Disclosure: Of the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.