The New Plug Power Generation
With all due respect to Prince, Great Stuff is taking over as the head of the new power generation. We’re looking for the cream of the investment crop so you can deck yourself out in diamonds and pearls … it should make you a happy boy or a girl.
Today, we have an investment opportunity with hydrogen fuel-cell king Plug Power (Nasdaq: PLUG).
Hey, um… Mr. Great Stuff. Isn’t this Reader Feedback day? Too much cruising around in your raspberry beret?
No, Great Ones, I haven’t forgotten what day of the week it is … yet. Plug Power is part of the Great Stuff Picks portfolio — one that many readers are invested in. And, the company reported fourth-quarter earnings this morning, which received a negative reaction on Wall Street.
So, before we dive into the mailbag, we’re going to take a look at Plug’s report and see just why today is an opportunity … especially for those of you that haven’t yet jumped on the Plug profit train.
Let’s start with the numbers because that’s where Wall Street has an issue:
Plug reported a loss of $1.12 per share, wider than the loss of $0.07 the consensus expected. This wider loss wasn’t the reason for PLUG’s drop.
Most investors and analysts expected earnings to come in light. Plug is spending heavily to grow its business, including ramping up production to keep up with all the deals the company is signing.
The real sticking point was the surprise negative revenue, which came in at negative $316.3 million. The consensus revenue target sat at $87.2 million.
Now, I will be the first to admit that negative revenue is bad. I have harped on lack of revenue on many, many occasions, especially when it comes to speculative plays in the alternative power market.
However, Plug’s revenue didn’t fall because it’s not selling products. It fell because the company accelerated the vesting of customer warrants. We’re not talking “Cherry Pie” or “Heaven” big-hair 80s band Warrant, either.
Stock warrants give an investor the right to buy a stock at a specific price at a specific date. These are issued directly by the company, making them different than stock options. If you want more details on stock warrants, Investopedia has a great article on them here.
Needless to say, stock warrants cost money. And that money comes off a company’s top line, i.e., their revenue. In the fourth quarter, Plug Power vested (or paid out) $456 million in warrants earlier than expected. The move was likely to get these warrants off its books so it could move forward.
Now, let’s do a little math. Plug paid out $456 million in warrants and posted negative revenue of $316.3 million. Minus the cost of the warrants, Plug’s revenue would have been $139.7 million. That’s far above the consensus revenue target of $87.2 million.
With this in mind, let’s take a final look at Plug’s quarterly report:
Earnings missed expectations because the company is spending money on growth. This is the good kind of spending, especially for Plug Power.
Revenue missed because of stock warrants but actually blew past expectations minus those warrants. This is very good for Plug Power.
The bottom line here is that today’s 10% decline is an opportunity for all the Great Ones out there that have yet to buy PLUG.
And if you’re wondering why you should buy into Plug Power, those Great Ones that bought PLUG when I recommended it back in October are up roughly 200%!
There are more gains to come as hydrogen power establishes its dominance in the new power generation. So, don’t get off this ride just yet and keep holding or buy PLUG now (if you haven’t already).
Editor’s Note: Party Like It’s 2099!
Governments around the world are pushing for greener energy sources. Still, many of have set compliance dates far into the future.
But you can’t wait years to party like it’s 2099. If you do … party over, oops, out of time!
One California company — started by one of Tesla’s original employees — may be far from a household name. But it holds all 100 patents on a “superbattery” that could power a whole American city … for free!
Remember, investing is like a party … and parties weren’t meant to last.
Alright, now that Plug Power is out of the way … let’s get to your questions!
Remember, if you’re looking for more injections, inspections, detections, neglections and selections … you can join in the “fun” by emailing me at GreatStuffToday@BanyanHill.com. We’re leaving no part untouched!
Ummm … too far on the Arlo Guthrie there, Mr. Great Stuff.
We’ll just pretend that didn’t happen. But, you get the idea. So, you’ve got questions. I’ve got answers. Let’s do this!
Any thoughts on DCRB and its noticeable drop since you recommended buying it? Is this a second quarter and beyond play to wait out? Thoughts appreciated. Thanks. — Dan P.
Thanks for writing in, Dan!
I have to say: I love it when readers answer their own questions. Yes, Decarbonization Plus Acquisition (Nasdaq: DCRB) is a “second quarter and beyond play” that we’re going to wait out.
John K. and R.F.Y. — this answer is for you Great Ones as well. (Thanks for joining in!)
Hyzon Motors, the company that is going public via merging with Decarbonization, has excellent prospects. It also already has hydrogen fuel cell trucks on the road.
But that doesn’t help Great Ones that are down on the position right now. What I can tell you is that you will be rewarded for hanging in there. We got in early, so some slippage in DCRB is natural. The merger won’t happen until the second quarter, and this puts DCRB and Hyzon out of the headline news. This market is all about the headline news, and investors lost interest. They’ll be reminded in due time, and investors will be rewarded.
The second issue with DCRB is the negative press for new power coming out of Texas. It’s a real shame because this is … umm … what’s the phrase? Oh yeah, “Fake news.” Only about 25% of Texas’ power comes from renewable new power. And that power, in many cases, wasn’t winterized.
A snowstorm in Texas? It’s about as likely as the Spanish Inquisition … nobody expected it. But that’s no reason to blame renewable power. Still, investor sentiment is investor sentiment, and so DCRB took on the added weight of the backlash.
My point is that if we hang tight — diamond hands, to steal a WallStreetBets phrase — we’ll make back these losses and then some.
The Walls of Jericho
I have owned Jericho Oil for quite a while, and when oil plunged, so did Jericho. BUT to my amazement, I am now back in the green on Jericho. It seems they have gone the way of hydrogen. Is this a potential Cinderella story, or should I take the green and run?
Love your FREE email, and I know you owe me nothing, but thought since you have been on the hydrogen shelf for a while, I’d join in. — Don S.
Don, I owe Great Ones like you quite a bit. I mean, you read my ramblings day in and day out. And you find them useful and entertaining. Thank you!
So, Jericho Oil (OTC: JROOF) is a Vancouver, Canada-based oil and natural gas company that’s seen where the winds of change are blowing. (And it’s not down to Gorky Park … listening to the wind of change.)
If that whistling isn’t stuck in your head yet, let me help you along.
Anyway, back in January, Jericho bought Hydrogen Technologies and launched a new initiative to move into hydrogen production. The company is banking on a patented technology called the “cleanH2steam Dynamic Combustion Chamber.” The idea is to take natural gas and create blue hydrogen.
If you read last week’s dissertation on hydrogen power, you’ll know that blue hydrogen is a middle ground in the push toward green energy. Green hydrogen is made straight from water, while blue and gray hydrogen is made from fossil fuels like natural gas.
Jericho’s cleanH2steam tech is touted as a more efficient carbon capture process, putting the company on the path toward greener energy. This is exactly the kind of transitional advantage I’ve been talking about with hydrogen power. It gives old dinosaur energy companies a path toward greener energy without too much disruption to their existing business.
As for investing in JROOF? Hmmm. I like the company’s potential. It’s moving in the right direction. However, I’d need to see more progress on the hydrogen front before I’d be interested in taking the risk — we don’t want the walls to collapse on us, now do we?
Since you’re already sitting on gains, Don, you have to ask yourself if that return is what you want or if you’re shooting for something bigger. That’s a risk you’ll have to weigh on your own.
I’m not a penny stock guy. In fact, when someone mentions one I am already out the door most of the time.
But this one stuck and I won’t mention any tickers. I’ve been following this “HUMBLE Payments,” and they claim to have a pretty amazing model. Curious if you, Mr. Great Stuff have any insight into this or maybe other fintech winners. SQ obviously having potential.
Is this achievable? What they say they will do? — Huston S.
Good to see you again, Huston!
I know you didn’t mention any tickers, but I hope you don’t mind if I do. This is quite the bizarre situation if I do say so myself.
The company you’re talking about is HUMBL Financial, which is about to merge with Tesoro Enterprises (OTC: TSNP). Tesoro used to specialize in construction supplies, including flooring and wall coverings for contractors and interior designers. I wrote about this particular situation this past week in “Billionaire Bitcoin Bets.”
Honestly, this situation makes me very nervous. From construction supplies to bitcoin? I don’t know if HUMBL or Tesoro can do what they plan to do. The duo wants to launch a cryptocurrency ETF-like product but driven by software and not an actual ETF. It’s just weird.
I do know that similar situations haven’t looked upon all that favorably by the SEC. It might be achievable. But then the powers that be might shut them down before they get that far. There’s just way too much risk involved here for me.
Audience of One
Used Fivr four years ago to design a logo for our band. Really did cost just $5. Got it done in three days. Used the design on our business cards and promo tee-shirts. What a deal! Here’s the design. Can’t blame me for trying to get some free advertising, can you? — Mark T.
Sneaky, Mark. Very sneaky. You have an audience of one — I have an audience of many (I’m pretty sure anyway.) I can’t drop your logo in here, but maybe someone will pick up on what I’m putting down and check you out. I hope your band is more successful than the many I’ve had over the years. Good luck, my man! And as for Fiverr (NYSE: FVRR) … I’m keeping an eye on it.
Moon Over, Elon
Shut the @#% up, Elon! — Nomad
This bitcoin dip is a golden opportunity to buy more, so that is what I done. I haven’t sold any; I am going to the moon! — Jose G.
You guys are killing me with this mooning stuff and Elon dissing. Keep it coming!
To the moon, bitcoin hodlrs!
OK, Ford! We’ve discontinued Thursdays and will pretend they didn’t happen! — Ted B.
Thanks, Ted! But I’m just this guy, you know?
That wraps it up for today. For all those numerous readers writing in saying “Add me!” or “Sign me up!” … guys … all you have to do to sign up for Great Stuff is CLICK HERE: Just click here!
Once again: Just click here if you want to sign up for Great Stuff!
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Until next time, stay Great!
Editor, Great Stuff