Shares of Ballard Power Systems Inc (NASDAQ: BLDP) jumped as much as 24.1% in trading Tuesday after the company announced a large strategic investment. At 12:40 p.m. EDT, shares were still up 16.7% on the day.
Chinese-based Weichai Power is investing $163 million in Ballard for a 19.9% stake in the company. The price is a 15% premium over the stock's 30-day average price.
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The two companies are also forming a joint venture to make fuel cell vehicles in China. As part of the deal, a $90 million technology transfer program has been set up for Ballard. The joint venture aims to provide fuel cell stacks and power modules for buses, commercial trucks, and forklifts in China.
Along with Weichai's investment, Zhongshan Broad-Ocean Motor Co., Ltd. is investing another $20 million to maintain its 9.9% ownership stake in Ballard.
Investors are seeing bullish signs in both the joint venture and the new money coming into Ballard. It's unknown right now what impact the joint venture will have on revenue or earnings, but it will likely be an incremental benefit to the company. The additional cash will also help stabilize Ballard's operations given the fact that it's still losing money. The challenge now is turning this company into a moneymaker long-term.
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