What happened
Shares of energy-in-a-box pioneer Bloom Energy (BE 3.25%) jumped furiously in Monday trading -- up 17.2% as of 12:45 p.m. EST, and on no apparent catalyst for the surge.
So what
So what's the explanation for this sudden enthusiasm over Bloom Energy stock? If I had to make a guess, I'd say it's that this isn't "enthusiasm" at all but rather short-sellers having an attack of nerves.
Bloom Energy, after all, has been very good to short-sellers of late. Because it has shed 85% of its value over the past year, folks betting against the stock have made a lot of money. But here's the thing:
In just three days, after close of trading on Thursday, Nov. 7, Bloom is due to report its fiscal Q3 earnings results.
Image source: Getty Images.
Now what
Now, Bloom's numbers might not be great this week. (Indeed, investors are braced for negative earnings.) But analysts think there's a reasonable possibility that Bloom will break even and report neither profits nor losses but $0.00 per share earned. Not losing money is a pretty low bar to clear, even for Bloom, and in the event investors react positively to such news, short-sellers will probably be elsewhere when that happens.
Thus my guess: Today's surge in "buying" at Bloom Energy is actually more a case of a lot of short-sellers trying to out their short positions in unison so as to protect the profits they've already made -- just in case Bloom surprises and reports a profit of some sort on Thursday.
With earnings forecasts as dismal as they look, even a surprise as small as just a penny-a-share profit could cause a lot of pain to short-sellers.
