Shares of Ballard Power Systems (BLDP 1.31%), Bloom Energy (BE 2.82%), and Plug Power (PLUG -0.40%)fell by 23%, 34%, and 48%, respectively, in 2018, according to data from S&P Global Market Intelligence.

That's a big change from the way fuel cell stocks spoiled investors rotten in 2017. That year, when the broader market rose more than 19%, Ballard popped 167% on news of improving financials, and Plug Power soared 99% on the enthusiasm generated from the company's blockbuster deal with Amazon. Bloom Energy wasn't at the party then -- it only began trading on the public markets this past summer. So what went wrong in 2018? Let's take a look.

A bear walks over small wooden cubes displaying 2018.

Image source: Getty Images.

An early beginning to Ballard's bad news 

Check out the latest Ballard Power Systems earnings call transcript.

Ballard started off 2018 on an inauspicious note, after a report from short-seller Spruce Point Capital cast significant doubt on the company's prospects in China. The report contended that "Ballard's Chinese growth ambitions are likely to fail from weak partnerships with [China-based] Broad Ocean and Synergy." That view was validated toward the end of the year. In its Q3 earnings release, Ballard reported revenue of $21.6 million, which came up well short of analysts' expectations for $31.3 million. Moreover, in the related press release, CEO Randy MacEwen said: "Near-term headwinds in China resulted in a material reduction in MEA [membrane electrode assemblies] sales to the Guangdong Synergy-Ballard joint venture in Q3 and in our outlook."

Instead of a top line of $121 million for 2018 -- which was what Ballard forecast at the end of 2017 -- the company now expects those headwinds from China to result in a revenue figure between $90 million and $95 million.

It wasn't only the top line that disappointed shareholders last year. Ballard has distinguished itself from its peers by managing a degree of profitability; it has consistently churned out a gross profit. Through the first nine months of 2018, however, its gross profit margin contracted from 36% to 33% year over year. Adjusted EBITDA also suffered, moving from $1.24 million in the first nine months of 2017 to a loss of $8.27 million in the same period of 2018.

This blossom didn't last long

Enthusiasm was in no short supply for the newest fuel-cell stock on the block last summer. On their first day of trading, shares of Bloom Energy, which opened at $18.70 soared 25% and closed at $25. Optimism extended through late September when shares hit an intraday high of $36.59. But that's when the excitement stopped.

Following the company's release of its third-quarter earnings report early in November, the stock plummeted 31% through the rest of the month. A cursory glance at its financials would suggest the company performed well. On a year-over-year basis, revenue rose 103% year-over-year; likewise, non-GAAP gross profit climbed 399%, and adjusted EBITDA jumped 153%.

Composed of green leaves, the chemical symbol for hydrogen gas floats above a grassy field.

Image source: Getty Images.

Impressive as these figures may be, they require a footnote. Without the investment tax credit (ITC) in place during 2017, Bloom had to reduce its selling prices, so the comparisons between that year and 2018 (when the ITC was reinstated) are a little skewed. The greater cause for concern in the report, though, was management's outlook for the fourth quarter -- a period in which it sees decreased profitability. On the conference call, CFO Randy Furr said that the company estimates that international markets -- where margins are slimmer than in the U.S. -- will account for 60% of its acceptances (when a Bloom Energy Server is turned on and begins producing power). According to Furr, this push toward international markets reflects Bloom's commitment to long-term growth. "After ITC sunsets, the international [market] will likely represent some of the highest margin opportunities for Bloom," he said.

Continuing to plug along but failing to impress 

Check out the latest Plug Power earnings call transcript.

During the first two trading days of 2018, shares of Plug Power hit intraday highs of $2.44. After that, the stock declined steadily through the rest of the year. Largely, investors shrugged off the company's accomplishments. In February, for example, the company reported Q4 2017 results that included gross revenue of $133 million for the full year -- 55% higher than the $86 million it reported in 2016. And more recently, Plug Power set a company record in Q3 when it achieved an adjusted gross profit margin of 15%.

Investors, however, placed greater emphasis on where the company has stumbled. For the second quarter, for example, Plug Power had forecast an EBITDAS (earnings before interest, taxes, depreciation, amortization, and stock-based compensation) loss in the range of $7 million to $9 million. It failed to hit that, reporting an EBITDAS loss of $13.5 million.

Beyond the financials, investors were disappointed with the company's lack of progress on its expansion in China. In 2016, Plug Power made inroads in the electric vehicle market there, and management appeared optimistic that the country would prove to be fruitful. Matters haven't quite played out according to plan, though, as the company has failed to find an adequate partner there. Notably, management said on the Q3 conference call that Germany seemed to represent an equally compelling opportunity to China for Plug Power to expand in the electric vehicle market.

The electric takeaway

While fuel-cell stocks powered gains in investors' portfolios in 2017, last year's results were strikingly different. Considering the wide variation in performance between these stocks over the past two years, it'll be interesting to see how 2019 pans out -- especially considering the fact that, of late, fuel-cell stocks have rebounded significantly. As of this writing, Ballard, Bloom, and Plug Power have risen 29%, 23%, and 19%, respectively while the S&P 500 has inched 3.6% higher. Specifically, it'll be intriguing to see how these three peers progress in their marches toward profitability.