Plug Power Inc (NASDAQ:PLUG) surged 17.72% on Wednesday to close at $5.05, and went up another 2.57% in after-hours trading to $5.18. The stock witnessed an unusually high trading volume of 57.39 million shares on the day, compared to the average daily trading volume of 16.26 million shares. The Latham, New York-based company’s stock also saw unusually large options trading activity. Traders purchased a whopping 55,617 call options on the company on Wednesday, compared to the typical daily volume of 8,790 call options.

Plug Power

Family Dollar, Walgren interest in Plug Power’s fuel cell systems

Other fuel cell stocks also rallied. Ballard Power Systems Inc. (NASDAQ:BLDP), which supplies fuel cell stacks to Plug Power Inc (NASDAQ:PLUG), surged 16.57%. Hydrogenics Corporation (NASDAQ:HYGS) advanced 13.42%, while FuelCell Energy Inc (NASDAQ:FCEL) gained 7% on Wednesday. The fuel cell rally came after Jennings Capital analysts initiated coverage of Hydrogenics and Ballard Power with a Buy rating. The research firm’s positive rating suggests that it’s optimistic about the fuel cell industry, at least that’s what markets believe.

Before Wednesday, trading volume in Plug Power Inc (NASDAQ:PLUG) had declined significantly due to lack of any bullish or bearish catalysts. Short interest in the stock has risen to 23.2% of the float. So, experts were expecting a massive short squeeze ahead of the second quarter results. On June 12, Plug Power announced that companies such as Family Dollar Stores, Inc. (NYSE:FDO) and Walgreen Company (NYSE:WAG) have expressed interest in replacing the lead-acid battery-powered forklifts with efficient hydrogen-powered fuel cells.

Execution a key challenge for Plug Power

Plug Power Inc (NASDAQ:PLUG) aims to become profitable by the end of this year. But the company has a long history of over-promising and under-delivering. The company has never been profitable, and has lost an estimated of $850 million since its inception. A high level of short interest reflects the market’s opinion that Plug Power management would fail to execute well.

Plug Power Inc (NASDAQ:PLUG) stock doesn’t look cheap. It’s trading at 28x last year’s sales and a whopping 283 times its estimated earnings for FY2015. However, expectations are high from the company’s GenKey solution. Bookings have more than doubled to $80 million in the first quarter of this year. Chief executive Andy Marsh is targeting full year revenues of $70 million.