Plug Power Ignition

A few days ago we wrote The Boulevard of Broken Dreams, a blog post about Plug Power ($PLUG) in which we said:

We look at $PLUG as an options on the modern fuel cell technology. Buying $PLUG buys you convexity on this market but the underlying payoff has also some convexity to the upside because of the impact of reflexivity (Soros) between the stock price and the business.

This situation has tremendous potential energy to the upside. Some will be disappointed that we are not pulling out a 180 pages Ackman presentation about this situation. Doing this would be intellectually dishonest. When dealing with the adjacent possible....We just don't know.

But we know this about this situation. We know that in order to rocket launch and transform this potential energy into kinetic energy, we need an ignition, a catalyst. If Plug Power ignites, this situation will reverse the downward trend and start trending the other way in a massive way. 

We believe the catalyst resides in having one of $PLUG top customers extend the GenDrive solution from location one to location two.  Here is what Plug CEO said during the latest 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)

We find it interesting that Wal-Mart($WMT) has eliminated its battery room. If this was an experiment, it would have most likely kept its battery room at this facility. Wal-Mart has 158 distribution centers in the USA. You do the math ;-). If $WMT decides to implement the GenDrive solution to a second distribution center, Plug Power will have made a reality of the adjacent possible. 

Makes sense right? But actually, WMT has implemented the technology in 3 distribution centers already. Check out this press release issued by Ballard Power System ($BLDP). Could it be that the market is not paying attention? What is the value of the Wal-Mart potential future business?

The pent-up customer demand is visible to the team at Plug Power. (PLUG CEO comments, transript www.seekingalpha.com)

No kidding!

But this is not only about $WMT, it also about Fedex ($FDX), Procter & Gamble ($PG), Sysco ($SYY), Coca-Cola ($KO), Mercedes Benz.....

Let us know what you think.

Disclaimer: Bigger Capital, LLC, Bigger Capital Fund, LP, Bachelier, LLC and the Bigger family are large holders of $PLUG stock.

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. 

Written by Michael Bigger. Follow me on Twitter and StockTwits.