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It's Not Too Late to Detach From Plug Power

NEW YORK (TheStreet) -- The world of financial writing can be a lonely place some times, especially when you're wrong. Although I didn't win many friends recently for suggesting that investors detach themselves from Plug Power (PLUG), it turns out I was right. But don't confuse this for gloating. Timing this stock and predicting its next move has been hard. 

Wednesday morning, the fuel cell power specialist reported results that missed Street revenue targets, which sent the stock tumbling down around 7%. Total first-quarter revenue dropped 12.5% year over year to $5.6 million. I don't think that was as bad as some estimates, which called for revenue of $5.35 billion and a 17% decline.

However, when looking at the segmental performances, the story was far different. There was no way anyone can be pleased with a 32% decline in product revenue. Although the 62% year-over-year jump in service revenue mitigated some of that damage, the 25% drop in research contracts gave it all back.

More than anything, it is this sort of performance that causes the dilemma as to whether this stock should be invested in or traded.


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Even though the fuel cell industry continues to carry robust projections and plenty of optimisms, there is no evidence this company can effectively monetize that demand. From an operational perspective, this belief was affirmed. 

Plug Power reported an adjusted net loss of 6 cents per share, which was less than half the 13 cents non-GAAP loss per share seen a year ago. While that is impressive in its own right, it still wasn't enough to meet Street estimates of a 5-cent loss. 

This continues the company's string of weak fundamentals, including last quarter's 241% year-over-year decline in net income, which fell from -$8.47 million to -$28.88 million. Despite this underperformance, investors still piled in on the stock, which had (at one point) soared more than 4,500% over the past year, reaching a 52-week high of $11.72 in March. But since that March high, Plug has lost almost 70% of its value. Reality has set in, and it says, valuation matters. 

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