Last week, Spruce Point Capital Management took aim at Ballard Power Systems (NASDAQ:BLDP)(TSX:BLDP) via a press release and an article on Seeking Alpha, a website well known for publishing articles with short (and often distorted) theses.
Shorters often use these distribution channels to see if they can illicit a market reaction to the downside. Traders with a short position bet a company's stock price will decline, thus making them a profit.
The plan worked for a couple days, but shares of BLDP are surging in Monday trading after the company offered an upbeat outlook and took a moment to discredit some of Spruce Point's "facts."
The Vancouver-based fuel cell company said it expects fiscal 2017 revenue to be a record in the area of $120 million. Management also expects positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and to end the year with about $60 million in cash on hand. The company has scheduled its quarterly and year-end call for March 1, 2018 to go through the complete final performance information.
One of Spruce's beefs with Ballard was that the company wasn't being forthright about China, claiming that there are no fuel cell bus demonstration lines operating in Guangdong, Sanshui or Yunfu. Ballard rebutted this with:
"In fact, according to the local transit operators, 11 of the previously commissioned fuel cell buses powered by Ballard technology have been operating in the Cities of Foshan and Yunfu since October 2016, traveling a total of more than 240,000 kilometers to date. The remaining 13 commissioned fuel cell buses are ready for operation, subject to receipt of license plates from the appropriate local authorities."
With respect to Spruce's claim that the Synergy Ballard joint venture could only produce "a few hundred" fuel cell stacks annually, Ballard fired back that 1,145 stacks have been produced since operations started in September, including 558 stacks being produced in December alone. Beyond that, Ballard took the high road, saying it will just let its results do the talking.
Shareholders are loving the update, sending shares up nearly 30% to $3.89 with about 30 minutes left in Monday's trading day to basically recover all the ground lost since the report was issued.
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