Shares of Bloom Energy (NYSE:BE) fell as much as 26% today to push the company's market valuation below $400 million. That's a far cry from the more than $3 billion market cap shortly after its initial public offering (IPO) in 2018. But investors are increasingly pessimistic about the future of the solid oxide fuel cell developer.
Notably, Hindenburg Research earlier today published an article on Seeking Alpha arguing that Bloom Energy is destined to fail. According to the article, the company's $520 million in maturing debt in 2020 and 2021 makes it "an obvious bankruptcy candidate." Hindenburg Research is short the stock.
As of 11:55 a.m. EDT, the stock is down 23.2%.
The article from Hindenburg Research is a little dramatic at times. For instance, it compares the company to the failed blood diagnostic start-up Theranos, but Theranos was a rare case of outright fraud, whereas Bloom Energy displays an inability to profitably commercialize technology.
That said, individual investors have known since the IPO that Bloom Energy was struggling to find its way. The company's fuel cell technology was prohibitively expensive for customers without generous subsidies and wasn't close to generating operating profits. That remains true today.
In fact, the business reported an operating loss of $122.7 million in the first half of 2019. It generated an operating loss of $153.8 million in all of 2018.
Stationary fuel cells can generate a significant amount of power in a relatively small footprint, especially compared to rooftop solar arrays. But that doesn't mean much if the technology can't compete economically. While Bloom Energy might be able to refinance its debt and extend the maturity dates, finding lenders willing to take on that risk could be difficult, given the state of operations. Regardless of whether the business is destined to declare bankruptcy as Hindenburg Research argues, individual investors shouldn't be going anywhere near this fuel cell stock.