What happened
Stocks in the alternative energy sector have been retreating recently. Among fuel cell companies, Plug Power (PLUG +7.33%), Ballard Power Systems (BLDP +2.90%), and Bloom Energy (BE +2.40%) are down 64%, 55%, and 45%, respectively, over the past three months. After Ballard reported quarterly financial results last night, shares of the companies continue to fall today. As of 11:05 a.m. EDT, shares moved as follows:
- Plug Power was down 5.9%;
- Ballard Power Systems fell 20%; and
- Bloom Energy dropped 8.6%.
So what
Today's primary catalyst was Ballard's first-quarter 2021 financial report, but there are other troubling issues in the sector. Last night, Ballard said it lost $0.06 per share, which wasn't unexpected. But it also reported a 26% decrease in revenue compared to the year-ago quarter, significantly missing expectations. Analysts expected revenue to grow to $25.7 million, but the company reported total revenue of only $17.6 million.
Image source: Getty Images.
Now what
Ballard said the drop in revenue was seen in both its power products and technology solutions segments. The company's fuel cell power products are used in buses, trucks, and light rail, as well as for backup power and marine applications. Its technology solutions help customers accelerate fuel cell development and deployment efforts. The company pointed out that its program with automaker Audi was the main reason for the revenue drop in the segment.
The agreement calls for the use of Ballard's high-power density fuel cell stack for vehicle propulsion. The stack is used for a variety of light-, medium-, and heavy-duty vehicles. The company didn't give details on the specific reason for the drop in revenue from the program. One area in Ballard's power products segment that did show an increase in revenue was in material handling, from higher fuel cell stack sales to peer Plug Power.
Plug Power's stock has been under pressure since the company said in March that it was going to have to restate three years' worth of financials related to the accounting of warrants it issued to customers as incentives. Plug has said the accounting issue won't change its business progress, and wasn't a cash item so it won't affect its balance sheet, but investors aren't likely to embrace the company again until those issues are clarified.
Plug has continued to announce new business initiatives, including a recent agreement with BAE Systems to collaborate on powertrains for hydrogen-powered electric buses in North America. Last week, Bloom Energy announced its first hydrogen-powered fuel cells are going to be used to generate on-site electricity in South Korea.
But investors aren't likely to reward the companies until the business growth converts into positive financial results. Investors can look for a sign of that when Bloom reports its first-quarter 2021 results after the market closes tomorrow, May 5.
