Shares of hydrogen fuel cell company Bloom Energy (BE 10.99%) fell as much as 14.9% in trading this week and ended down 13.2% from last Friday's close, according to data provided by S&P Global Market Intelligence. Renewable energy stocks are selling off overall, but Bloom Energy's problems are related to a disappointing earnings report.
From bad to worse
Revenue dropped 22.8% in the fourth quarter to $356.9 million, and non-GAAP gross margin dropped 300 basis points to 27.4%. Non-GAAP operating profit fell from $59 million in the year-ago quarter to $27.4 million.
Management said sales to South Korea have been weaker than expected, and that continued in 2024.
To make matters worse, CFO Greg Cameron said he is leaving the company, which isn't usually a positive sign for a company trying to execute growth plans.
Uncertainty remains
The hydrogen energy business continues to have high potential, but it remains very risky for investors. And as with all renewable energy companies, higher interest rates are making it more difficult to finance projects around the world.
The good news for Bloom Energy is the company's relatively high margins compared to some hydrogen competitors who are losing money on everything they sell.
If the hydrogen energy industry proves to be a large market, Bloom Energy could be one of the winners. But it's not clear if hydrogen has a bright future or not. Right now, the evidence isn't pointing in the right direction.
I think Bloom Energy still has a lot of potential given differentiated technology and the best margins in the industry. Lumps like this week's decline are part of the volatility investors should expect from such a high-reward, but high-risk, industry.
