What happened
For the second day in a row, shares of fuel cell company Ballard Power Systems (BLDP -0.59%) are blowing up -- in a good way.
After forging ahead 14.6% on Monday on news that it is introducing a "disruptive technology" to "materially reduce the costs and scale production capacity of next-generation, proprietary graphite bipolar plates," Ballard stock is tacking on another 12.1% gain through 10:45 a.m. ET Tuesday -- bringing the stock's total gains to 29% since the close of trading last week.
So what
Ballard explained in its press release yesterday that it is engaged in an effort to lower the cost of its proton exchange membrane fuel cells by lowering its cost of producing the parts of these fuel cells. Having already developed a "next generation" graphite bipolar plate, then expanded production capacity of membrane electrode assemblies, Ballard's next step is to expand production of the plates.
Ultimately, the company hopes to reduce its cost of producing fuel cells by 70% by late 2025, aiming to hit a Department of Energy "cost target" of $5 per kW for electricity production using its fuel cells.
Now what
Corporate press releases about cost-reduction initiatives aren't usually the things of which 29% stock price rallies are made of. True, in the case of Ballard, a company that hasn't reported a profit since 2008, reducing costs a bit probably would be a good idea. However, it's worth pointing out that even with these cost reductions, most analysts polled by S&P Global Market Intelligence don't foresee Ballard turning profitable in 2025 -- or in 2026, 2027, or 2028, either!
In fact, investors have to look out all the way to 2029 to find an analyst predicting any profits at all for Ballard -- six long years. That's a long time to ask investors to wait to see if a bet on Ballard will pay off.
Unless you're far more patient than the average investor, the best use of today's stock price rally at Ballard Power Systems might as an opportunity to exit the stock.
