Spiky Plug Power Catalyst
- Posted by Michael Bigger
- on September 13th, 2013
The article ends with Marsh saying “I would be watching sales over the coming months. Watch where sales are coming from.”
A critical piece to our $PLUG investment thesis is the impressive client list. Well-known companies like $WMT, $KO, $SYY, $PG, and others are buying Gen-Drive units to power forklifts at distribution and assembly centers. For the most part, conversion to $PLUG powered centers has been on a limited or test basis. We find it interesting that $WMT has eliminated its battery room in its latest deployment of $PLUG’s solution. If this was an experiment, it would have most likely kept its battery room.
Andy’s comment leaves open the possibility that a big customer may be rolling out hydrogen-powered forklifts at multiple centers on a more widespread basis. Let’s use $WMT as an example, although we could use any of the above listed customers here. Currently, $PLUG is in just a handfull (less than 5) of $WMT’s 168 nationwide distribution centers. If $WMT were to announce a multi sites deal with $PLUG, it would mean significant revenues. On average, each of $WMT’s 168 centers have more than 100 forklifts. Assuming $PLUG sells its solution for $18,000 a unit, this business has at least $300 million of revenue potential. In addition to direct revenue, this kind of buy-in from a company like $WMT would be a “proof of concept” as to the benefits of the $PLUG product. These two factors, in our opinion, would serve to move the stock much higher.
Of course, we have no direct evidence that $WMT (or any customer, for that matter) is signing up for $300 million of GenDrive units this year. We are merely pointing out the potential opportunity here, should a customer increase the pace of $PLUG solution deployment.
Here is what Marsh said during the first quarter earnings conference call:
We are also quite excited to announce that the Wal-Mart Washington Courthouse Ohio Distribution Center completed deployment of over 250 GenDrive units powering their forklift truck fleet and have removed their battery room. 3 or 4 of our largest customers discussing multiple distribution centers, up to 5 in some case, where they’re looking to migrate to fuel cells, where they’re working through their expansion plans internally. (Source www.seekingalpha.com)
All it takes for a spiky catalyst is one or more clients going in for multi site solutions. Can you visualize the catalyst?
Disclaimer: Bigger Capital, LLC, Bigger Capital Fund, LP, Bachelier, LLC and the Bigger family hold about 3% of Plug Power. We intend to increase our position if the company’s results track our benchmark.
Plug Power is a highly distressed situation and it is not suitable for the majority of investors. The likely outcome of an investment is a loss of principal.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Michael Bigger is an investor and a trader who has been involved with trading technologies for more than twenty years. In 1992, Michael joined Citibank as head trader of U.S. single-stock derivatives, where he managed a $5 billion portfolio of equity derivatives. In 1998, he joined D.E. Shaw & Co., L.P. to trade the U.S. equity derivatives portfolio. (More)