RE: sp12 May 2021 17:25
Reason three is also relevant to Ceres and more of a worry than inflation
https://www.fool.com/investing/2021/05/11/what-in-the-world-happened-to-ballard-power-system/
What in the World Happened to Ballard Power Systems' Revenue?
The fuel cell maker's bottom line has always been in the red. But now, its sales also have taken a hit.
Fuel cell maker Ballard Power Systems (NASDAQ:BLDP) stock fell nearly 20% after it reported its quarterly results last week. Investors surely had high expectations from the stock, which was getting valued at more than 80 times its sales in January. In fact, the company has set for itself a lofty target of 46% annual sales growth through 2030. Against this backdrop, a 26% year-over-year drop in first-quarter sales understandably upset investors. Let's see why Ballard Power's Q1 sales fell, and what can be expected from the company going forward.
Why Ballard's Q1 sales fell
Ballard Power reported revenue of $17.6 million in Q1, which was 26% lower than the year-ago quarter. The company's management cited three main reasons for the drop in revenue. First, last year's comparable quarter was strong due to a large shipment, as well as no impact of COVID-19. So, in comparison, the revenue looked low in the latest quarter. Second, the company's sales historically are tilted toward the second half of the year, while the first half is typically weak.
The third reason, which I think is the most important, is that the policy pronouncements relating to hydrogen fuel cells in China had been slow in the last few quarters. China is Ballard Power's key market and accounted for 52% of its 2020 revenue. The company controls 45% of China's FCEV (fuel cell electric vehicle) market. It has a joint venture with China's Weichai Power, which also owns 15.5% of Ballard Power's outstanding shares. Indeed, slow development on the international policy front has impacted Ballard Power's sales growth in China.
This dynamic has long-term implications beyond the next few quarters. Advancements in battery technology could continue to impact hydrogen fuel cells' growth in the long term. In the absence of strong policy support, hydrogen fuel cells may not see the rapid growth that fuel cell companies are hoping for. Even though hydrogen fuel cell costs have fallen significantly over the years, they are still not competitive compared to other energy and storage options. So, they are dependent on government support and incentives to be financially viable -- not a great position to be in.
Sign In
Follow the stocks
