Proprietary power platform Ocean Power Technologies (NYSEMKT:OPTT) — one of the few specialists in wave power or harnessing the natural oscillations of the ocean for conversion into usable power — saw its shares soar on Wednesday. A U.S. government contract effectively provided a much-needed credibility boost for OPTT stock, which previously struggled badly.
According to the company’s press release, Ocean Power “reached an agreement in principle on a sole source contract award for multiple WAM-Vs for delivery to a Department of the US Government.” WAM-V stands for Wave Adaptive Modular Vessel and refers to a groundbreaking class of autonomous surface vehicles (or ASVs) that can accommodate a wide range of open-water conditions. The platform is particularly suited for marine data collection.
What’s notable about the contract is that the federal government issued it on a “noncompetitive basis.” Essentially, this means that Ocean Power represented the only candidate for the job; that is, the company did not have to bid against rival entities.
Generally, federal agencies must award contracts on a competitive basis. However, certain conditions call for noncompetitive contract awards. Some of these special cases involve “an unusual and compelling urgency that the government would suffer serious financial or other injury.”
Curious Eyes Turn to OPTT Stock
There’s a strong possibility that at least some of the dramatic sentiment toward OPTT stock stemmed from the noncompetitive nature of the underlying contract. Indeed, in a statement regarding the news, Ocean Power CEO and President Philipp Stratmann said the following:
“We believe this agreement is further proof that our systems form an important part of building out the future of ocean security. Using small Unmanned Surface Vehicles, like our WAM-V, is a cost-efficient force multiplier for the US Government and other offshore operators. The dual use nature of our technologies enables us to provide systems to a broad set of customers.”
Per the press release, “[r]evenue will be recognized ratably over the course of the contract with an expected near-term delivery date. Due to the sensitive nature of this relationship, terms have not been disclosed.” Given rising geopolitical tensions, OPTT stock likely attracted curious eyes.
According to Ocean Power’s website, WAM-Vs offer significant military applications. They provide “the ideal platform for multi-domain (air, sea, and subsea) marine autonomy for a variety of defense and security missions, including maritime domain awareness, high value asset protection, security perimeters, mine counter measures (MCM), anti-submarine missions, and border security.”
OPTT stock is incredibly risky, currently trading hands around 21 cents. That said, it’s possible today’s news item can help boost long-term interest.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
