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Plug Power: The Long and Short of the Trade

Tickers in this article: AMZN PLUG WMT

NEW YORK ( TheStreet) -- The share price of Plug Power   is up an eye-popping 1,060% since Nov. 26. After the market close of Wednesday, the maker of fuel-cells packs for forklifts announced its purchase of ReliOn, a developer of hydrogen fuel cell stack, in an all-stock deal worth $4 million. Plug shares traded late Friday at $7.06.

What began with Plug's  announcement in early December of its expectation to finally make a profit after 14 years of product development, aborted market directions and serial share dilutions, has morphed into a speculative fight between relentless momentum traders and a growing chorus of vocal shorts who anticipate an imminent bubble run-in with a pin.

At nearly 30-times sales, the stock trades at a price already discounting not only a full-year fiscal 2014 revenue guidance of $70 million but also a potential revenue-double for fiscal 2015, stemming, in part, from Wal-Mart's anticipated order stream to outfit more of the mega-retailer's distribution centers.

In essence, investors who take a stake in Plug today are pricing in a two- or three-year flawless performance from Plug CEO Andy Marsh whose track record of forecasting anything remotely accurate has yet to be witnessed since as far back as 2010, as Andy Left's Citron Research aggressively asserts.

As a result of three years of the alleged Marsh double-talk, some say the man is downright disingenuous, while others say that Marsh's string of guidance misses comes from a combination of unexpected technical defects in Plug's past products and a childlike streak of optimism along the way.

However, today, investors have been assured that the company's new products are shown to be much more reliable, as Wal-Mart's follow-up order of 1,700 fuel-cell packs and related services implies that the most demanding of buyers is now satisfied with what it sees. Therefore, projected deliveries and revenue will, too, become more reliable (see Fourth Quarter Earnings Call ), according to Marsh.

Going forward, at $150 million of potential revenue from Wal-Mart, alone, according to private equity investor, Michael Bigger, Plug would then trade at 4.7 times sales at today's market cap.

Contrast that valuation metric with another of Wall Street's long-runway-to-profitability stock, Amazon , whose market cap of nearly 14 times revenue at the close of fiscal 1998 didn't frighten off investors for another nearly 100% move higher before crashing along with the Nasdaq in 2000.

Though Plug is no Amazon, the comparative cult following of Plug appears to be similar at this time. And just as Amazon investors didn't see a bubble forming in 1997 to 1998, the longs don't see Plug as a bubble stock quite yet, either, not while Plug's tiny revenue merely scratches the surface of the estimated annual $36 billion material handling market -- a market size estimated by Bigger.