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Saturday, December 3, 2022

A Close Look at Ballard Power Systems Inc. (USA) (NASDAQ:BLDP)

Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) has dropped significantly after the run up it saw last month to highs over $3 a share when they announced an $80 million deal with Volkswagen. The stock gapped up in the am followed by a small dip and rip which continued up for the rest of the day closing a few cents off the HOD.

BLDP, which trades in tandem with PLUG had been in steep decline in recent months with investors slowly losing confidence making the $80 million Volkswagen all the more important.

Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) is dually listed on the NASDAQ and the Toronto Stock Exchange (TSX) where it trades as BLD. The Company is located in Burnaby, British Columbia and is focused on designing, developing and manufacturing zero emission proton-exchange-membrane fuel cells. Ballard Power Systems, Inc. is a global leader in PEM (proton exchange membrane) fuel cell technology and the Company has designed and shipped close to 150 MW of hydrogen fuel cell technology to date.

On February 11, 2015 BLDP announced that they have entered into a Technology Solutions transaction with Volkswagen Group (Volkswagen AG), and Audi AG, for an aggregate amount of approximately US$80 million for the transfer of certain automotive-related fuel cell intellectual property (IP) and a two-year extension of an engineering services contract.

Prof. Dr. Ulrich Hackenberg from AUDI said “Audi, VW and the Volkswagen Group are very pleased with the acquisition of a world-class automotive fuel cell patent portfolio. We believe that this portfolio, together with the combined fuel cell skills and expertise of our group and Ballard, will underpin our ability to play a leading role in fuel cell automotive development and commercialization.”

BLDP CEO Randy MacEwen said, “This transaction extends and deepens our relationship with the Volkswagen Group, a leading global automotive manufacturer. The IP transfer surfaces significant value for Ballard. And, extension of the engineering services contract reflects a growing positive sentiment toward fuel cells within the automotive sector, along with the outstanding progress made to date in our work with Volkswagen Group on its fuel cell car programs.”

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As per the agreement BLDP will transfer the automotive-related portion of fuel cell IP assets previously acquired from United Technologies Corporation, in return for payments from Volkswagen Group totaling US$50 million, a majority of which is expected to be received at the closing of the transaction during the current quarter. The remainder is expected to be received in early 2016.

The transaction also includes a 2-year extension, through March 2019, of the existing long-term engineering services agreement signed by Ballard and Volkswagen in 2013. This extension has an incremental value estimated at C$30-50 million (approximately US$24-40 million). Over the full 6-years, the contract has an estimated value of C$100-140 million (approximately US$80-112 million), and also includes a further optional 2-year extension.

Ballard Power Systems Inc. was originally founded as Ballard Research by Dr. Geoffrey Ballard, Paul Howard, and Keith Prater. The company went public in 1993 on the Toronto Exchange, and in 1995 they got listed on NASDAQ.

BLDP recently entered into a multi-year agreement with Plug Power (NASDAQ:PLUG) for the supply of fuel cell stacks that are used in GenDrive systems deployed in forklift trucks. Already this is proving to be a smart move for BLDP who’s stock tends to trade in tandem with PLUG.

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BLDP had been in steep decline in recent months after the Company lowered its full-year revenue growth estimate to 20% from the prior 30% and investors began to lose confidence. This $80 million Volkswagon deal is the catalyst that BLDP has been waiting for to stop the bleeding and start moving up. This stock has plenty of reasons to go up; the fuel cell market is growing and is expected to continue to grow and BLDP is making all the right moves; improving the balance sheet, cutting loses, signing new lucrative contracts that will benefit this Company over the long run.

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Disclosure: we hold no position BLDP either long or short and we have not been compensated for this article.

Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.

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