What happened

Monday was a big day for investors in Westport Fuel Systems (NASDAQ:WPRT).

News that Westport is restructuring its debt, and has secured a 15 million euro loan for its Italian subsidiary, along with a $10 million term credit facility from Export Development Canada (Westport is based in Vancouver), raised hopes that the company, which reported a breakeven profit last year but turned unprofitable again last quarter, might make it through this coronavirus thing intact after all.

Westport stock ended the day up 23%.

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

Today, reality seems to be setting back in, and Westport stock is tanking 11.5% as of 3:05 p.m. EDT.

On the one hand, yes, analysts at Lake Street Capital last week commented that Westport's debt restructuring "removes a significant overhang as it was the largest and nearest maturity of Westport liquidity needs" (reports TheFly.com). Yes, the analyst also "believes the company has addressed liquidity needs for the next 18-24 months, giving it runway to recover from COVID-related shutdowns." And yes, on average, Wall Street analysts who track Westport still, by and large, agree that after losing money again in 2020, this company will turn profitable in 2021 -- and may even remain profitable in later years.

Now what

That being said, history appears to argue the opposite. Since the last financial crisis, Westport has failed to earn an actual full-year GAAP profit even once. It hasn't generated positive free cash flow either -- not even last year, when GAAP profits did at least get to breakeven.

The stock is down 35% over the past year, which tends to suggest that most investors are less optimistic about Westport than the published analyst projections. With a market capitalization of just $224 million and $30 million in net debt on its balance sheet, and more loans being added on top of that -- but still no free cash flow to pay down that debt -- I fear Westport isn't out of the woods yet.