BLDP Stock Up 43% YTD: Should You Be Watching Ballard Power Systems?

BLDP Stock

BLDP stock is on fire this year. Since the beginning of the year, Ballard Power Systems Inc.’s (NASDAQ:BLDP) stock has gained over 43% year to date. Comparatively, the S&P 500’s stock gained 15% in the same time period.

Key Drivers

This is a remarkable recovery considering BLDP stock dipped 23% last year. Various bulls indicate that BLDP is likely going to continue growing, but bears are skeptical about Ballard Power Systems, indicating that it is richly priced and investors should be patient.

Although Ballard offers fuel-cell products and services in various markets, the heavy-duty motive market is recognized by bulls as the main avenue for the company’s prosperity. In FY2017 and Fy2018 this segment generated 53% and 41% of Ballard’s revenue.

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The company has partnered with Audi to develop fuel-cell modules for electric vehicles in Europe, but its main focus is pursuing opportunities in China. In China, Ballard has partnered with Zhongshan Broad-Ocean Motor Co and Weichai Power in a joint venture to develop fuel-cell engines for buses in various Chinese cities. From the joint venture with Weichai Power, the company will receive $90 million for technology transfer for the development of fuel-cell stacks.

Bears Skeptical about BLDP Stock

Although Ballard has made good progress, its presence in China has had challenges resulting in investor skepticism about BLDP stock. For instance, in Q3 2018 Ballard reported $21.3 million in revenue, which was short of the $31.3 million projected by analysts. However, in the Q4 2018 report, the company pointed out that it did not receive contractual pre-payments from the above joint venture.

Equally, Ballard has failed to keep down its costs for it to be profitable. Bears believe that Ballard will continue relying on issuance of equity to raise capital, which will further dilute BLDP stock value.

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Featured image: DepositPhotos @ antb