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Previously, we warned you about the never-ending plunge in Plug Power (NASDAQ:PLUG) stock. Could an already bad situation get even worse? It’s possible, as Plug Power is suddenly dipping into an electric vehicle infrastructure niche market. This could be a major failure for a company that can’t easily afford to fail.
Eager traders are constantly on the lookout for recent developments and bold ventures. Sometimes, however, it’s better for certain companies to just stay in their lane.
Don’t confuse activity with progress. Plug Power might tout its recently announced business venture, but this doesn’t mean it’s a smart move. In the final analysis, Plug Power stock traders should think about whether the company’s foray into a crowded market is worthwhile or just hasty.
Don’t Get Charged Up Over PLUG Stock
So, here’s the supposedly big news. According to a press release, Plug Power seeks to delve into the business of charging commercial EVs. As you might expect from hydrogen-focused Plug Power, the company plans to use a “clean hydrogen-powered fuel cell system” to achieve this.
Let’s be frank about this. There are plenty of businesses out there already, including some publicly traded ones, that are already in the EV charging business. Plug Power won’t be a first, second or third mover in this highly competitive field.
Plug Power General Manager of Applications and Global Accounts Jose Luis Crespo promised that this “will be a game changer for the EV industry.” But then, if you’ve heard this type of hype again and again in corporate press releases, you’ll know that actual “game changers” in the EV market are few and far between.
PLUG stock traders didn’t seem too impressed with the announcement. The Plug Power share price didn’t make a big move in the days following the press release, so investors are evidently apathetic about the company’s new business concept.
Plug Power’s Big Unanswered Question
It’s no secret that Plug Power has been unprofitable for a long time. The company certainly doesn’t have a stellar track record for earnings beats versus misses.
We’ve also discussed Plug Power’s cash burn, which has been an ongoing concern for the company and its stakeholders.
So, instead of getting overly excited about Plug Power’s foray into the ultra-competitive EV charging industry, prospective investors should ask a crucial question: How much is this going to cost Plug Power?
It’s a highly relevant question, given Plug Power’s less-than-ideal financial situation.
Then, we can consider a follow-up question: When does Plug Power expect to turn a profit from this new venture? We’ll save you the time and effort of trying to hunt down Plug Power’s responses to these vital questions. The company didn’t provide any financial figures, or even ballpark estimates, in its press release.
Plug Power Stock Looks Risky Now
Plug Power stock has lost substantial value over the past couple of years. So, it’s understandable if some investors are eager for news – anything that might seem like a positive catalyst is welcome.
Yet, not all new news is necessarily good news. Plug Power isn’t in a good financial position to spend large amounts of capital on risky ventures. There are already multiple players in the EV charging infrastructure field with established networks.
Plug Power already had an unfavorable risk-to-reward profile, and it might have just gotten a lot worse. Therefore, you don’t have to succumb to the temptation to jump into the trade now with PLUG stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.