Why Ballard Power Systems Inc. Shares Slumped Today

Is this meaningful or just another movement?

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Apr 29, 2014 at 2:21PM
Energy, Materials, and Utilities

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Canadian fuel cell company Ballard Power Systems (NASDAQ:BLDP) sank 11% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has soared over the past year on rapidly rising fuel-cell adoption, but today's first-quarter revenue miss -- top line increased 13% to $14 million against the consensus of $15.3 million -- coupled with in-line guidance is forcing analysts to scale back their expectations a bit. While Ballard's net loss narrowed to $3.8 million from $7.9 million in the year-ago period, it isn't improving fast enough in Wall Street's eyes to justify the recent price surge.

Now what: Management reaffirmed its full-year guidance for breakeven adjusted EBITDA on revenue growth of about 30%. "Our Q1 results reflect continued improvement in key metrics, consistent with our business outlook and full-year guidance for 2014," President and CEO John Sheridan said in a press release. "Also, after the quarter we were pleased to close a strategic transaction with United Technologies, giving Ballard a commanding industry position in fuel cell intellectual property and strengthening our ability to grow shareholder value." More important, with the stock now off about 55% from its 52-week high, Mr. Market might finally be offering enterprising Fools a decent chance to buy into those growth prospects.