Since its earliest days, Plug Power (PLUG -3.33%) has been a volatile stock. In some years, the developer of hydrogen fuel cell systems has seen its shares surge several times in value. In other years, investors have lost nearly everything. This is clearly a boom-or-bust business with both massive upside and downside potential.
Since 2020, Plug Power's revenue has grown by 186%. This has given many investors a heavy dose of optimism about the company's future. But there's an even more important number every investor should be tracking.
This is the most important number for Plug Power shares right now
Revenue-wise, Plug Power has had an impressive few years. Sales have grown nearly 200% since 2000. And despite a recent dip, revenue over the past 12 months totaled around $660 million. That's not bad for a company valued at $2.1 billion operating in what could be a multi-decade growth story: the rise of hydrogen as a global fuel source.
Looking at Plug Power's potential, it's possible to assume the company is a worthwhile investment. But there's another number every investor should be aware of now.
PLUG Revenue (TTM) data by YCharts
Despite Plug Power's revenue growth since 2020, the company is losing more money than ever. Over the past 12 months, the company generated a gross loss of around $600 million -- nearly as much as its total revenue. Why hasn't profitability ticked up alongside revenue? The answer is revealed when you understand Plug Power's business model.
Plug Power primarily designs and manufactures equipment that allows businesses and consumers to use hydrogen fuel, a climate-friendly fuel source that can, theoretically, replace more pollutive fuel sources in some of the hardest-to-abate sectors, including transportation, aviation, and cement production.
The main issue is that this infrastructure is very expensive to produce. And despite advancements, hydrogen technology still isn't cost-competitive across most metrics. So, Plug Power is constantly reliant on both smaller pilot projects and massive government subsidies to survive. However, in the long term, it must find a way to achieve profitability. That's why I'm tracking gross profits more than revenue.
