Plug Power Inc. (NASDAQ: PLUG) ended the trading week on a positive note, with shares closing Friday at $2.32, up 0.9% on the day and 6.4% for the week. The gain follows a mixed second-quarter earnings report that highlighted a significant one-time benefit from a service contract, which helped the hydrogen equipment maker nearly break even on gross margin.
According to the company's filing, the gross margin for the second quarter was negative 0.9%, a substantial improvement from the negative 13.2% in the first quarter and the negative 30.7% in the same period last year. This improvement was largely driven by a $15.7 million benefit from the termination of a service contract, which added 8.8 percentage points to the margin. Without this benefit, the gross margin would have been around negative 9.7%, still an improvement from previous quarters but less impressive.
Plug Power also credited stronger pricing, improved reliability of its GenDrive fuel cell units, and more efficient labor utilization for the margin gains. Service revenue surged 82% year-over-year, with its gross margin reaching 27%, while fuel revenue grew 15% with a gross margin improvement to negative 48% from negative 91%.
The company reported revenue of $178.3 million for the quarter, up 9% from the previous quarter and 2.5% from a year ago, surpassing the consensus estimate of $160.1 million. Adjusted loss per share was $0.07, beating expectations by one cent.
Despite these improvements, the company faces a steep challenge in the second half of the year. Management raised its revenue growth guidance for 2026 to 15%-16%, implying full-year revenue of approximately $816 million to $824 million. With first-half revenue at $341.8 million, Plug Power needs to average about $237-$241 million per quarter in the second half, a 33%-35% increase from the second quarter's revenue. This is a significant hurdle, and investors will be watching to see if the company can deliver.
Cash management is also a key focus. Operating cash outflow for the first half decreased 18% to $244.1 million, and capital expenditures were cut by 89% to $8.7 million. Net cash usage in the second quarter declined sequentially by 58%. However, unrestricted cash stood at $161.9 million as of June 30, down from $368.5 million at the end of last year. The company has generated $52 million from asset monetization and identified over $275 million in additional liquidity opportunities.
CEO Jose Luis Crespo expressed confidence in achieving a positive EBITDAS target in the fourth quarter of 2026, but the coming months will test whether revenue acceleration can keep pace with funding needs.
Analyst sentiment is divided, with 14 analysts covering the stock. Three rate it a buy, eight hold, and three sell. Price targets range from $0.75 to $7.00, with a mean target of $3.20, implying about 38% upside from Friday's close. The wide range reflects uncertainty about the company's ability to improve plant economics and manage cash flow.
Investors will monitor trading volume, financing updates, and operational consistency in the coming weeks. The stock closed 8.7% below its intraday peak on Tuesday, indicating some profit-taking after the earnings pop.
