Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Ballard Power Systems Took a 21% Nosedive in May

By Scott Levine – Jun 7, 2021 at 1:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were anything but charged up about this fuel cell specialist last month.

What happened

Falling more than 10% in April, shares of Ballard Power Systems (BLDP -0.62%) extended their decline last month and plunged 21%, according to data provided by S&P Global Market Intelligence

What zapped investors of their enthusiasm? Besides an uninspiring earnings report for the first quarter of 2021, Wall Street's wave of bearish takes on the stock propelled investors to sell shares.

Person who uses a wheelchair seems concerned while looking at laptop.

Image source: Getty Images.

So what

Beginning the month on an inauspicious note, Ballard reported Q1 2021 earnings after the market closed on May 3. Investors weren't pleased with the report; shares plunged 20% the following day. Reporting $17.6 million -- a 26% year-over-year decrease -- on the top line, Ballard failed to meet analysts' expectations of $25.7 million. Management, however, tried to spin the revenue miss on the conference call, contending that the sales figure "was actually consistent with our own internal expectations for our plan for 2021."

Ballard failed to deliver on the bottom line as well. Whereas analysts were expecting the company to report negative earnings per share of $0.04, Ballard reported a $0.06 loss per share. But it wasn't only the headline figures that disappointed investors. Ballard also reported a steeper operational cash outflow, $10.3 million, during the first quarter of 2021, representing a 46% decrease compared with the same period last year.

While the company's earnings report was the most significant factor leading to the sell-off last month, the onslaught of pessimism from the Street helped to exacerbate the stock's decline. Two days after Ballard released its report, Roth Capital downgraded the stock to neutral from buy and slashed the price target to $15 from $32, according to Taking a less extreme view -- though still bearish -- Raymond James downgraded the stock to outperform from strong buy and lowered its price target to $25 from $40. B. Riley and BMO Capital also lowered their price targets, to $26 from $30, and $23 from $35, respectively.

Now what

Those interested in the fuel cell industry will surely find Ballard on their radars since there are so few publicly traded companies available to investors. And while global enthusiasm for hydrogen power solutions is ramping up, fuel cell companies -- like Ballard demonstrated in its recently completed quarter -- are still struggling to prove that their endeavors can be profitable. Investors committed to gaining fuel cell exposure, nonetheless, would be better served considering one of Ballard's competitors like Bloom Energy.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ballard Power Systems Stock Quote
Ballard Power Systems
$5.62 (-0.62%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.