The Burnaby fuel cell maker gets a boost from the Inflation Reduction Act
The stock: Amid the renewed stock market carnage of recent weeks, one cohort of issuers had something to celebrate. Makers of green energy technology enjoyed a sizeable bump after U.S. President Joe Biden signed the Inflation Reduction Act into law on August 16. The omnibus bill includes some US$369 billion for renewable energy initiatives and further tax credits for purchases of zero-emission vehicles. Among the beneficiaries was Burnaby-based hydrogen fuel-cell maker Ballard Power Systems (TSX, NASDAQ:BLDP).
The drivers: The experience of being a Ballard shareholder can be likened to being a fan of a Vancouver pro sports franchise (pick any one). Over 29 years as a public company, it has repeatedly raised hopes only to disappoint, posting just one profitable quarter in that time and burning through US$1.5 billion in shareholder and government funding.
It really does appear that there is a role for hydrogen fuel cells in the transition to clean energy, however, if not the central one that early backers imagined. And Ballard has as much intellectual property, accumulated expertise and industry relationships as any player in the space. The customer base for Ballard’s bus, truck, train, marine and stationary power units to date has been primarily in Europe and China. The passage of Biden’s climate bill promises that the U.S. (even outside California!) will become a major market too.
Second-quarter results released in August provided little reassurance, mind you. Ballard reported revenue of US$20.9 million, down 16 percent year over year, and a net loss of US$55.8 million. With more than US$1 billion in cash reserves, however, the company has ample time to wait out the current slump in orders until the Bidenbucks kick in.
BLDP stock closed at $9.45 on the Toronto Stock Exchange on Tuesday, down from its August peak of $11.45 but still comfortably higher than the sub-$8 lows of June.
Word on the street: Morningstar raised its fair value estimate for Ballard’s shares to $11 on the basis of “assumed higher long-term revenue growth thanks to hydrogen incentives in the Inflation Reduction Act… We continue to project modest revenue growth in the coming years for Ballard before an inflection around 2025, consistent with management's guidance.”
Coming & going: Vancouver’s WonderFi Technologies (TSX:WNDR) has acquired Toronto-based Blockchain Foundry (CN:BCFN) in an all-share deal equivalent to 13.4 percent of WonderFi’s shares outstanding (or $12.6 million in today’s depressed crypto market). This follows the $206-million buyout of Bitbuy in March and $38.5-million takeover of Coinberry in July.