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.
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.
The good news is management, which delivered strong full-year guidance, remains confident about the company's position. The company said it expects to deliver more than $70 million in full-year sales. This is $5 million more than the Street had projected. In the second quarter, management expects to ship over 650 GenDrive power units.
For this performance, CEO Andy Marsh offered:
"We are focused on building a large profitable company. Investments in the sales team, hydrogen generation, hydrogen distribution, geographic expansion and stack technologies are just some of the steps being taken by Plug Power today to build our future."
I commend Marsh for his confidence. In fairness, neither he or his company is to blame for what has happened to Plug's stock. The blame belongs solely on investors (I won't say "speculators"). The fact is, there isn't anything a company can do when investors fall in love with the shares.
Still, there are questions management must address. Perhaps more importantly, management has to convince a jittery market that the company's weaknesses, particularly its deteriorating net income and operating cash flow, can be fixed. It doesn't seem as if that is going to happen any time soon.
With shares still up well over 1,500% over the past year, investors who have been long the stock over the past 12 months have done well. But it's now time to move on to the next great idea.
At the time of publication, the author held no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.