Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) stock is soaring today, gaining more than any other stock on major U.S. stock exchanges after inking a $80 million deal with Volkswagen AG (ADR) (OTCMKTS:VLKAY) giving the automaker fuel-cell-related intellectual property.
The deal also extends a servicing contract that BLDP and Volkswagen have for two years, according to Ballard’s news release Wednesday morning.
BLDP stock was up as much as 62% this morning before settling to about 50% above yesterday’s close at midday Wednesday.
BLDP-Volkswagen Deal Lifts Entire Industry
Publicly traded fuel cell companies celebrated vicariously for BLDP stock today: FuelCell Energy Inc (NASDAQ:FCEL) stock spiked 6.3%, Plug Power Inc (NASDAQ:PLUG) stock gained 5.8% and Hydrogenics Corporation (USA) (NASDAQ:HYGS) stock added 4.5% as the hydrogen fuel cell stocks rallied.
The widespread gains by Ballard’s peers are, simply put, not rational. Grasping for some modicum of logic, bulls could be optimistically hoping that the BLDP-Volkswagen deal foreshadows more auto-related deals to come in this relatively small industry.
After all, an $80 million deal may be small potatoes to many public companies, but BLDP stock is soaring precisely because of its relative obscurity. With a market capitalization of $335 million and projected revenues of $71 million in 2014, $80 million is a veritable fortune.
FCEL, PLUG, and HYGS are similarly diminutive by Wall Street standards, with market caps of $395 million, $560 million and $150 million, respectively, so BLDP’s size is par for the course in the fuel cell business.
BLDP-Volkswagen Deal Follows Toyota’s Lead
A few weeks ago, I wrote about Toyota Motor Corp (ADR) (NYSE:TM), and how its hydrogen fuel-cell Toyota Mirai threatens the all-electric vision of Tesla Motors Inc (NASDAQ:TSLA) Elon Musk. Like Tesla, Toyota is building out a network of hydrogen fueling stations to help make its product viable:
“The carmaker is financing the construction of 19 fueling stations in California, and 12 in New York, New Jersey, Rhode Island, Massachusetts and Connecticut. The State of California has even pledged $200 million to build at least 100 fueling stations over the next 10 years.”
Moreover, Toyota and Volkswagen aren’t the only carmakers investing in fuel cell technology:
“Honda Motor Co Ltd (ADR) (NYSE:HMC) has a fuel-cell car dropping in 2016, and Hyundai Motor Co Ltd (OTCMKTS:HYMLF) also has one on the road. This emergence of low-emission competition doesn’t just threaten TSLA, but also Nissan Motor Co Ltd (ADR) (OTCMKTS:NSANY) and its $29,000 EV, the Leaf.”
Add to that lengthy list Volkswagen, the world’s second-largest automaker, and BLDP stock’s meteoric rise today starts to make some sense.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.
