Shares of Ballard Power Systems (NASDAQ:BLDP) fell 10% on Thursday morning before recovering somewhat, after the hydrogen fuel cell maker reported a fourth-quarter loss of $0.06 per share, missing estimates by $0.04, on revenue that was down nearly 30% year over year. The results threaten to stymie what had been an impressive run for the shares, which were up more than 40% year to date after a difficult 2018.
This was the second consecutive rough earnings report for Ballard Power, which reported a third-quarter revenue drop of 32% year over year and higher-than-expected expenses. Expenses were up in part because the company has been working toward completing a next-generation fuel cell technology -- designed for commercial trucks and construction equipment -- that is expected to launch this year.
The new tech was key in the company's November announcement of a new Chinese joint venture, a deal that included a $183 million equity infusion that alleviates any concerns over a potential liquidity crisis but also diluted existing shareholders. Ballard Power said that it will spend 2019 focused on building that joint venture with Weichai Power, as well as further penetrating the European and California heavy- and medium-duty equipment markets.
Alas, the company is not expecting those activities to dramatically move the needle in 2019. Although it does not provide specific guidance, Ballard Power did say it anticipates total 2019 revenue to be "relatively flat" compared with 2018.
Ballard Power has some advantages over its nearest competitor, Plug Power (NASDAQ:PLUG), including having zero long-term debt. But the company is also relatively expensive, even after Thursday's decline left it trading at 3.9 times trailing 12-month sales, versus Plug Power's 1.8 multiple.
The bigger question is whether fuel cells, which have so far failed to live up to the hype, will eventually mature into a formidable competitor against batteries for energy and transportation. While that day could still come, there wasn't a lot of evidence in Ballard Power's latest results that it is rapidly approaching.