Hydrogen fuel cells has been resonating during 2020 in a connection to $NKLA (Nikola Corp) and Trevor Milton. They could play a key role in shaping the future of renewable energy resources. And eTorians now have an opportunity to invest in businesses that are in the field of hydrogen fuel cells and actually have product (excuse the pun towards Nikola).
#1 RISKS INVESTING IN PLUG OR FCEL (or both)
Let’s start with risks. Both of the businesses face quite big risks as they both have very small customer base. Both companies have 2 customers who generated approx. 50% of their revenues in 2019. Both companies are still quite dependent dependent on debt and equity financing for growth. Competition is a risk as well as both businesses are competing with established car or energy companies, other fuel cell makers etc. The stocks can be (and will be) very volatile. History has shown us, there has been some wild swings in the past. When looking at specific risks, FuelCell is the one walking away weaker and facing higher risk. Recent challenge in Connecticut – the state’s decision to not reinstate previously granted awards – could impact the company’s growth there.
The battle here gets more clear. Plug Power easily beats FuelCell with avg. revenue growth of over 35% over the last five years. FuelCell revenue was mainly on downward trend during the same period. However, it’s important to mention that this was deliberately driven by FuelCell change of strategy – moving from selling fuel cell power plants to focus on PPA (power purchase agreements). It will help the company to benefit from future cash flows which is definitely a better strategy – although more challenging to implement in cash intensive business.
#3 SO WHICH ONE (OR NONE)
The decision is on you. I hope the information above helps with your research. Both stocks can show a great growth but won’t most likely be supported by fundamentals for some time. The other factor to consider is hydrogen fuel cells on its own and the cost. Here is a great video from Matt Ferrell: www.youtube.com/watch?v=DTPt32lZY30 – you will “feel like a scientist without the student loan debt” (stolen with pride from the comments section).
Disclaimer: I have invested small amount of portfolio to both for the short term. The above should not be taken as financial advise and is only for informative purposes