Plug Power Stock Plunged for the Wrong Reason
Plug Power (NASDAQ: PLUG) stock fell 13.6% on Thursday, Feb. 25 after the company's fourth-quarter results missed Wall Street's expectations. What's more, the fuel cell manufacturer reported negative revenue for the quarter. Though that sounds as bad as it can get, it really isn't. Let's take a deeper look to understand why.
Plug Power reported revenue of negative $316 million for the fourth quarter and negative $100 million for the year. In contrast, the company's gross billings were positive $96.3 million for the quarter and $337 million for the full year. The annual gross billings rose 42.5% year over year.
The difference in gross billings and revenue is due to certain warrants that the company gave years ago to its key customer Amazon. In 2017, Plug Power granted Amazon warrants to acquire up to 55.3 million of Plug Power's common shares at roughly $1.20 per share. You can think of this as a kind of rebate that Plug Power, looking for customers, offered to Amazon to buy its fuel cells and services. Vesting of the warrants required Amazon to buy goods and services worth $600 million, over time, from Plug Power. Of this, Amazon expected to make purchases worth roughly $70 million in 2017.
Source Fool.com
