Plug Power (NASDAQ: PLUG) stock leaped 7.1% higher through 10:50 a.m. ET Monday on the back of "news" that hydrogen power is getting more popular.
Over the weekend, BMW(OTC: BAMXF)(OTC: BMWYY) announced plans to mass-produce its first-ever hydrogen fuel cell automobile with assistance from Toyota Motor (NYSE: TM). And seeing as Plug Power aims to become the world's biggest producer of liquid hydrogen for use in hydrogen-powered cars, it makes sense that investors would flock to Plug stock this morning.
Toyota + BMW + Plug?
There are caveats to this story, however. First and foremost, the fact that it's not entirely "news." In fact, Nikkei Asiareported on the Toyota and BMW collaboration two weeks ago. That said, new details about the partnership are out today.
For one thing, the release date for the new fuel cell electric vehicle (FCEV): InsideEVs reports that it will arrive in 2028. And we know that Toyota will be supplying BMW with its latest, third-generation hydrogen fuel cell stack for use in the car.
Also according to InsideEVs, BMW is committed to this project, having reportedly designed its "Neue Klasses" (new-class) vehicle architecture specifically to incorporate hydrogen fuel tanks in space that will be used to accommodate batteries in other EV models. That could be good news for Plug -- a vote of support for its fuel of choice.
Does this make Plug stock a buy?
Other details of the announcement are less auspicious. Most importantly, the target date of 2028 means Plug will have to wait a while for any revenue influx from hydrogen fuel sales to BMW owners.
This means Plug must get along without any help from BMW FCEV owners buying its hydrogen fuel for at least four more years. Considering the company has only $62 million in cash and $916 million in debt, and that it is burning $1.5 billion per year right now, there's no guarantee Plug will even be around in four years to sell that fuel.
Should you invest $1,000 in Plug Power right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Bayerische Motoren Werke Aktiengesellschaft. The Motley Fool has a disclosure policy.
