February 20th, 2023 | 13:53 CET
Hydrogen bankruptcy? These are the laughing third parties: Plug Power, Amazon, First Hydrogen
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Plug Power: Juggling many challenges at once
The hydrogen specialist Plug Power is a real jack-of-all-trades: Having a joint venture with Renault called Hyvia around light commercial vehicles as well as the logistics giant Amazon as an investor and partner is already a house number. But Plug Power has even more to offer. The Company is also working with the South Korean company SK E&S and wants to build a plant for the production of fuel cells in the port city of Incheon. Production is scheduled to start in 2024. South Korea is considered a hydrogen country. Hyundai already has a series-produced vehicle with fuel cell drive in the form of Nexo. As a cooperation partner, Plug Power benefits from its numerous joint ventures - in case of doubt, blood is thicker than water, and orders from the Company's extended circle of influence are very likely.
Nevertheless, Plug Power's shares have had a black year: over six months, they have lost around 45% of their value. When even big players have to give ground, it is no wonder that smaller startups without significant collaborations slip into insolvency in a challenging market environment. Since the share has stabilized and Plug Power is well positioned on the market as a jack-of-all-trades, the value remains a kind of blue chip in the sector. Expansion into Europe is also conceivable for Plug Power. That the market on the "old continent" is becoming increasingly transparent is not a disadvantage for Plug Power.
First Hydrogen: More than just vans
First Hydrogen is also well-positioned in the market. The Canadian company specializes in building light commercial vehicles powered by hydrogen. First Hydrogen is also planning to expand into Europe and has valuable collaborations, such as Ballard Power and AVL Powertrain. Test vehicles will be on the roads of Great Britain in a few weeks. Potential customers will be able to test the possibilities of lightweight hydrogen commercial vehicles under real conditions. At the same time, the Company is benefiting from numerous support programs. As the Company is also involved in the production of hydrogen and filling stations, it has the opportunity to access various subsidies. Currently, major economies are engaged in a race to see who can best promote green energy.
First Hydrogen, Robert Campbell on Feb 15, 2023 at the 6th IIF
While many hydrogen stocks took a beating in 2022, First Hydrogen enjoyed impressive success - the stock climbed almost from penny-stock levels to over CAD 5. The stock has since consolidated and is trading around CAD 4. Given the various projects and the opportunity to cover the hydrogen business along the entire value chain, experienced investors may see the stock as a speculative addition. More background is provided in a recent post from researchanalyst.com.
Amazon: The main thing is green!
Amazon shows that hydrogen is important for many companies from traditional industries. The retail giant wants to give itself a green image. Many of the roofs of Amazon's logistics centres are already covered with PV modules. The energy generated there could either be consumed directly in the form of electricity or turned into green hydrogen through electrolysis. Examples such as First Hydrogen and Nikola show that delivery trucks can drive well with it and are also suitable for fuel cells. Nevertheless, investors in Amazon are hardly benefiting from the hydrogen fantasy - the traditional business is too big. After the stock was under a little pressure weeks ago due to economic fears, confidence has returned: the worst of the sell-off seems to be over, and the share should soon be trading at triple digits in USD again. For hydrogen investors, Amazon is more attractive as a potential customer or joint venture partner. First Hydrogen delivery trucks bringing packages from Amazon? That could fit!
When investing in hydrogen stocks, investors still need to keep the general sentiment in mind. Emerging interest rate fears are currently making investors more cautious again. Still, sentiment is much better today than in 2022, and if financing conditions improve for the foreseeable future, hydrogen stocks may even rebound. Smaller companies like First Hydrogen are well positioned to do so. But evergreens like Plug Power are also worth considering for investors.
Conflict of interest
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