© Reuters.
Ballard Power Systems (TSE:NASDAQ:), an unprofitable sector company, is facing concerns due to its increasing cash burn rate and a significant decline in operating income. Despite these challenges, investors continue to show interest in these types of companies, following the trend set by companies like Pets.com.
Last year, Ballard’s cash burn rate increased by 12%, causing concern among stakeholders. Additionally, the company has seen a substantial 32% decline in operating income over the past year. These factors combined have created some apprehension about the company’s financial health.
Despite these financial obstacles, Ballard has a considerable cash reserve of $817 million, which it is currently using to fund its growth. This cash reserve was $164 million last year, providing the company with a cash reserve of approximately five years.
Given Ballard’s market capitalization of $1.1 billion, it should be able to raise additional funds for growth without much difficulty. This is a common trait among unprofitable companies such as biotechnology or mining exploration that continue to attract investors despite high failure rates.
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