| Why It's Time to Sell Plug Power
"Tell me what you need. Cut that in half. And subtract one."
That was Bill Gates demand to his managers at Microsoft when they came to him with requests to add staff.
Employees are a resource. And he knew that the best way to get the most out of that resource was to make them work hard at doing more with less.
Now, it's not like Microsoft was ever starved for money. Even today they are sitting on $121 billion in cash.
But he knew easy money leads to sloppy decisions. So, this simple axiom was his way of enforcing discipline when allocating a high-tech company's key resource – its people.
Indeed, too much money can be a curse.
One in three lottery winners go broke. Resource rich countries are often the poorest. And companies that raise too much money too soon find it all to easy to over invest.
And it's that last point that sets up the trade I have for you today. Powering the Hydrogen Economy of the 1,000s of companies working furiously to stake a claim in the emerging renewable energy economy, one company capturing the imagination of investors is Plug Power (NASDAQ: PLUG).
The company develops hydrogen fuel cells to deliver clean energy solutions to electric vehicle manufacturers and stationary power generation markets. And given the massive need to store power efficiently from intermittent power sources such as wind, solar, and tides, I have no doubt that hydrogen will play a vital role.
It's fuel cells convert the electricity generated from those abundant but unpredictable sources into hydrogen. Once that power is needed fuel cells come into play once again to turn that power stored in hydrogen back into electricity.
According to PitchBook, Plug Power has raised $5.46 billion over its history. The company raised $1.2 billion of that during the last year, and today it's sitting on a cash horde of about $4.8 billion.
And with all that cash on its books, the management at Plug Power will be all too tempted to build out that infrastructure itself.
That's because there is very little infrastructure to support a hydrogen economy. That means that to get its solution to market quickly, Plug will have to build it. And that gets expensive fast.
Should all go according to plan, Plug expects that infrastructure to generate $1.2 billion in revenue by 2024. I don't doubt they will hit that target. But the problem I see is that, even with the 40% to 50% revenue growth required to hit that goal, the stock, at $26 per share, is trading at more than double what it's worth.
To your success, | 
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