There was a time early in 2014 by which if you had invested in FuelCell Energy (NASDAQ:FCEL), you would have made a pretty hefty return. If you'd held onto that position for the rest of the year, though, you would have it seen it slowly decline all the way to a 7% gain on the year -- just over half of the gain the S&P 500 made over the same timeframe.

FCEL Chart

FCEL data by YCharts.

The spectacular rise and fall of FuelCell's stock price this year can be summed up in one word: speculation. With news from other fuel cell companies looking very promising at the beginning of the year, traders sunk their teeth into these stocks and pumped them up to absolutely absurd levels. Just about everything that happened with FuelCell's stock this year had no correlation with the actual business, so let's take a look at what FuelCell Energy actually accomplished to see if we can start to make some sense of this wild ride. 

Back to where we started
From a business standpoint, the beginning of the year actually looked promising for FuelCell Energy. In its first-quarter earnings release, it beat both revenue and EBITDA estimates and was slowly narrowing the gap on its EPS losses that signaled the company was headed in the right direction. Unfortunately, it wasn't able to maintain that momentum, and revenue for FY 2014 came in less than FY 2013.

To make matters worse, the company has seen its backlog for products slowly dry up. Since the beginning of 2013, backlog for products has been cut in half from $228 million to just $113 million today. 

Source: FuelCell Energy Investor Presentation.

A large reason FuelCell has seen revenue and backlog decline is because in 2014, it completed its 59 MW hydrogen fuel cell park in South Korea, its biggest project to date. However, it is struggling to replace that project with new orders possibly because its product costs have not budged in quite some time. Product cost per kW for FuelCell's offerings has been above the $2,500 range for at least two years now. Granted, these costs are much lower than the average cost per kW of a fuel cell, according to Lazard's levelized cost of energy study, but it is still more than other power options, such as combined cycle natural gas turbines.

Source: Lazard presentation.

This isn't to say there wasn't any progress at the company this year. In 2014, the company signed a deal where NRG Energy (NYSE:NRG) bought $35 million in stock and opened a credit line of $40 million to finance new power plant projects. It also announced a $67 million project to expand production capacity at its existing facilities, which, combined with the manufacturing capacity of its partner POSCO in South Korea, will almost quadruple current production capacity. With NRG and POSCO holding a combined 17% of the company's equity, it gives the company a couple of deep-pocketed partners vested in the long-term success of the company.

What a Fool believes
Making an energy generation technology like hydrogen fuel cells commercially viable is a daunting task, and this past year goes to show that the road to success will not always be smooth. Declining sales and vanishing product backlog are two major black eyes that can't be covered up by these deals with POSCO and NRG Energy, and for the company's stock to ever again reach the levels it did this year, it will need to turn these trends around fast.