Why FuelCell Energy Stock Is Up 9% Today

FuelCell energy (FCEL 11.43%) shares were up 9.3% by 11:10 a.m. ET Tuesday on some curious news — news that, at first glance, didn’t seem to have much to do with FuelCell. In Turkey, bus manufacturer Karsan has announced plans to launch a hydrogen fuel cell bus powered by Toyota (TM -1.39%) fuel cell modules in 2025.

As H2 View reported this morning, the new bus will boast a range of 500 kilometers.

What this means for FuelCell

That’s good news for Toyota, I think. And tangentially, I suppose it’s good news for FuelCell Energy, too — on the theory that Toyota’s growing interest in hydrogen as a vehicle fuel source helps legitimize the fuel cell industry as a whole. But is there more to this story?

There may be.

Earlier this year, Toyota and FuelCell Energy jointly launched a “Tri-gen” production system in Long Beach, California, which will use FuelCell technology to produce electricity, water and hydrogen. The partnership suggests there could be a technology exchange between FuelCell and Toyota. At the same time, the pilot project tells us that Toyota is considering FuelCell Energy as a source of hydrogen needed to power the fuel cell vehicles that Toyota sells — primarily the Mirai fuel cell electric vehicle (FCEV), but and potentially hydrogen FCEVs that Karsan would produce using Toyota fuel cell technology.

Is FuelCell Energy stock a buy?

But is this Toyota-and-FuelCell partnership a good reason to buy FuelCell stock today? Even in light of the Karsan news, I don’t think it’s enough to move the needle. First, the Karsan buses using Toyota technology will not be on the market for another year or more, and there is no guarantee that they will be a commercial success.

FuelCell, on the other hand, is an unprofitable stock with less than $120 million in net cash and is burning through $250 million a year in negative free cash flow. Everything else will change, until that changes, I will not invest in FuelCell Energy stock.