The Poor Performance of Fuel Cell Stocks

August 7. 2015. 4 mins read

Fuel cells are said to hold great promise as a technology that can generate electricity cleanly and cheaply using only hydrogen and air. The fuel cell market is expected to experience strong growth in the coming years as seen in the below chart from Lux Research:


Our last article on fuel cells highlighted 10 stocks for investors who wanted exposure to this theme. 5 of these companies were only traded in the U.K. One of the companies, Hypersolar (OTCMKTS:HYSR), is a $9 million market cap over-the-counter stock with the usual red flags we see with OTC companies. This leaves us with four remaining companies which we used to create a market cap-weighted index using the Motif platform www.motifinvesting.com as seen below:


Since we created this motif about 2 months ago, it has already lost over -20% of its value leaving the total market cap of all index members at less than $1 billion. The entire fuel cell market for publicly traded fuel cell companies in the U.S. isn’t even worth one unicorn. Let’s take a look at what each of these four companies have been up to lately.

Plug Power (PLUG)

The largest member of our motif is Plug Power. PLUG’s main business is selling their Gendrive fuel cells for forklifts. In their most recent 10-Q, PLUG states that 95% of their revenues come from just three customers. Walmart, their biggest customer, accounts for 68% of their revenues. In the last trading session PLUG was down -14% on the back of their Q2-2015 results which saw record revenues of $24 million but a net loss of $9.3 million. The Company forecasts total sales for 2015 to be in excess of $100 million. Investors aren’t quite buying into the growth story however, with shares of PLUG having fallen -55% in the past year. Even though they are operating at a loss, PLUG has $109 million in cash on hand which should allow them to operate for at least a few years based on their current burn rate. They also recently expanded into Europe with their acquisition of Hypulsion. Even with the rosy outlook painted by PLUG management, the stock is currently trading near 52-week lows.

FuelCell Energy (FCEL)

At just over half the size of Plug by market cap, FCEL is also trading at 52-week lows. The Company builds stationary fuel cell power plants and has 50 locations operating in nine countries. Here’s a look at their revenues and net income over the past 5 quarters and 5 years.


We want to invest in fuel cell companies because we believe there is a high level of growth in this space based on estimates provided by knowledgeable research firms. In FCEL’s latest 10-Q, they state “The decline in revenue during the period is due to the decreased sales of fuel cell kits and modules“. We do not want to invest in a company that operates in a high growth space but then shows declining revenues. Maybe a competitor like Bloom Energy is stealing their market share. Maybe they are having problems scaling. With a contract backlog totaling approximately $312.2 million as of April 30, 2015, the potential for revenue growth is there. Based on the continuing share price decline, investors do not seem confident in FCEL’s ability to execute on this backlog.

Ballard Power Systems (BLDP)

Canadian fuel cell company Ballard dabbles in telecom backup power systems, grid storage systems, bus batteries, and forklift truck batteries. The Company is also hitting new 52-week lows. Earlier this year BLDP inked an $80 million transaction with Volkswagen in which they transferred their automotive-related fuel cell intellectual property to VW along with a 2-year engineering contract. Revenue growth for BLDP seems to be turning around on a yearly basis but quarterly revenues are sporadic:


As of June 2015, BLDP had $41 million in cash on hand to fund their operations going forward.

Hydrogenics Corporation (HYGS)

Hydrogenics builds vehicle fuel cells for trucks buses and trains and also operates 45 hydrogen fueling stations. Like the previous 3 companies we discussed, HYGS is also trading at 52-week lows, even hitting a fresh low in the last trading session. Yearly revenue and net income trends have been favorable as seen below:


HYGS recently signed an agreement with Alstom Transport to provide fuel cells for trains with a minimum commitment of 100 trains over the next 10 years. The contract is valued at over $54 million. They also have an existing backlog of $55 million, $35 million of which they expect to ship within the next 12 months.


Even though we’re expected to see strong growth in the fuel cell market in the coming years, the theme has fallen out of favor with investors as of late. This may be a good time to start dollar cost averaging into a position with these 4 fuel cell stocks at their 52-week lows. We’ll continue to use the “Nanalyze Fuel Cell Stocks” motif to track the overall performance of the “fuel cell market” going forward.

Update 05/20/2020: Fuel cell technology hasn’t taken off much since we wrote this article. Companies are targeting use cases like automotivesmartphone batteries, and air transport,  but fuel cells seem to lack the sort of momentum needed to achieve mainstream adoption.


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