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Ballard Power Systems testing facility in Burnaby, B.C. on Oct. 26, 2020.

Rafal Gerszak/The Globe and Mail

The hydrogen sector got a reality check from investors on Tuesday as shares in Ballard Power Systems Inc. tumbled almost 20 per cent after missing revenue estimates while other clean energy companies that flew high last year also saw their stock prices slide.

Burnaby, B.C.-based Ballard reported first-quarter revenue of US$17.6-million, compared with expectations for US$25.5-million in consensus estimates by analysts. Ballard’s adjusted earnings before interest, taxes, depreciation and amortization rang in at a loss of US$14-million, versus analysts’ estimates for a US$12.6-million loss.

The maker of hydrogen fuel cells has made a series of announcements this year for partnerships and collaboration, including a strategic alliance disclosed on Monday with Linamar Corp. for powertrains and components for light-duty vehicles.

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“However, this activity is not yet translating into meaningful orders,” TD Securities Inc. analyst Aaron MacNeil said in a research note.

Ballard’s share price dropped $4.85 to close at $19.99 on the Toronto Stock Exchange on Tuesday.

U.S.-based companies caught in Ballard’s downdraft included Plug Power Inc. , FuelCell Energy Inc. and Bloom Energy Corp.

Shares in Plug fell nearly 8 per cent while FuelCell dropped 5 per cent on the Nasdaq Stock Market. Bloom shares decreased 7 per cent on the New York Stock Exchange.

Ballard, Plug, FuelCell and Bloom stock prices skyrocketed last year amid excitement over the prospects for hydrogen playing a major role in the hoped-for global transformation to low- or zero-carbon energy sources. But their share prices have fallen sharply this year as investors take a closer look at stock valuations and discover that the hydrogen industry’s hopes for decarbonization in the long term have yet to translate into a strong stream of new revenue in the short term.

Ballard is largely betting its future on what it calls heavy-duty motive – supplying fuel-cell products for commercial vehicles that tend to travel much longer distances than passenger cars. Hydrogen fuel cells power vehicles by creating electricity without emitting carbon dioxide.

The company has been striving to diversify over the years, expanding well beyond the niche market for forklifts. Two months ago, for instance, Ballard said it is working with Canadian Pacific Railway Ltd. on a program to develop hydrogen-powered locomotives by retrofitting ones that rely on diesel.

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“I think we still need to take a step back and acknowledge and understand that these markets of bus, truck, rail and marine are still going through transition – very early stage of market adoption,” Ballard chief executive officer Randy MacEwen said during a conference call with industry analysts on Tuesday.

Mr. MacEwen said Ballard enjoys a healthy balance sheet, with US$1.27-billion in cash reserves at the end of the first quarter.

Ballard’s share price has been on a roller-coaster ride, going from less than $4 in early 2019 to a 52-week high of $53.90 on Feb. 9, 2021, before falling over the past three months.

MacMurray Whale, an analyst with Cormark Securities Inc., said Ballard’s focus remains on heavy-duty applications in China, Europe and California. “Investors will be watching results through the course of 2021 for evidence of a tangible increase in customer acceptance,” he said in a research note. “Fortunately, Ballard has never been better capitalized.”

CIBC World Markets Inc. analyst Hamir Patel said Ballard’s 12-month order book of US$73.1-million at the end of March had a negative impact on its stock price, but the company’s balance sheet looks very strong.

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