Plug Power (NASDAQ: PLUG) stock is seeing explosive gains in Tuesday morning trading. The hydrogen-power company’s share price was up by 19.7% as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence.

Before the market opened Tuesday, Plug Power published a press release announcing that it had started to produce green liquid hydrogen at its plant in Georgia. Per the announcement, that operation is the largest U.S. manufacturing plant in its category, and is capable of producing 15 tons of liquid electrolytic hydrogen per day.

Why is liquid hydrogen a big deal for Plug Power?

Plug Power says that 15 tons of liquid electrolytic hydrogen would be enough to power the daily operations of 15,000 forklifts. The company expects that ramping up its production of this category of hydrogen will positively impact its bottom line and move it closer to its goal of operating a green hydrogen ecosystem capable of producing, liquefying, storing, and transporting hydrogen. Management’s comments suggest that the company should see better margins from liquid-hydrogen production than it has on the gaseous hydrogen it’s currently producing.

What comes next for Plug Power stock?

Even after Tuesday morning’s noteworthy bounce, Plug Power stock is still down by roughly 96% from its five-year high. The business has seen relatively weak growth momentum and accelerating losses lately.

In 2023’s third quarter, Plug Power’s revenue grew just 5% year over year to reach $199 million. Meanwhile, the company posted a gross margin of negative 69% — worsening from a gross margin of negative 24% in the prior-year period. Across the first three quarters of 2023, it recorded a net loss of $726.4 million.

The start of liquid hydrogen production suggests that the company is seeing some encouraging demand in the pipeline. If the category grows quickly and becomes a large part of Plug Power’s sales mix, it could help the company move closer to profitability.

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Plug Power’s technologies have revolutionary potential, but there’s still a lot of uncertainty about the business’s outlook. Investors should approach the stock with the understanding that its major upside potential is paired with a high level of risk.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Plug Power Stock Is Skyrocketing Today was originally published by The Motley Fool