Ballard disputes short-seller report, forecasts record $120m in revenue

Ballard CEO Randy MacEwan

Ballard Power Systems (TSX: BLDP) is fighting back against a short-seller’s claims the Burnaby-based fuel cell company’s shares are overvalued.

The company’s shares fell 22% last week following a January 25 report from Spruce Point Capital Management that concluded Ballard’s 2017 stock gains were unwarranted.

But by Monday (January 29) the company disputed the report’s claims, stating in a release it’s projecting record annual revenue of about $120 million in the 2017 fiscal year.

"We believe these results fully validate our long-held belief that Ballard is uniquely positioned to capitalize on the worldwide trend toward zero-emission transportation," Ballard CEO Randy MacEwen said in a statement.

"Nothing we have seen in the short-seller report fundamentally changes our outlook for the business.”

New York-based Spruce Point Capital Management concluded Ballard’s 167% gain in value during 2017 came from perceptions of further fuel cell commercialization — or as it called it, “hype.”

“The primary force underpinning recent growth and future expectations has been Ballard’s China partnership efforts with Synergy Ballard JV (customer/partner) and Broad Ocean (customer/distributor).  At current valuations an investment in Ballard with an intermediate time horizon is essentially a bet on China Heavy-Duty Motive (HDM) success,” the report stated.

“We have conducted on the ground due diligence in China and believe that Ballard’s Chinese growth ambitions are likely to fail from weak partnerships with Broad Ocean and Synergy, and a market that is not developed enough to support fuel cell vehicle growth.”

The report went on to state China’s hydrogen fuel cell market is still in very nascent stages of development, claiming the country has 36 licensed fuel cell vehicles on the road.

Ballard took aim at other specifics in the report, fighting back against claims the Synergy Ballard joint venture produced a few hundred fuel cell stacks per year.

“In fact, the joint venture has produced 1,145 stacks since beginning operations in September 2017, including 558 stacks manufactured in December alone,” the company said in a statement.

Ballard’s share prices have since regained the ground it lost the previous week.

Ballard reports its 2017 fourth-quarter and annual financials on March 1.