Please ensure Javascript is enabled for purposes of website accessibility

Why Bloom Energy Stock Just Sank 9%

By Rich Smith - Feb 13, 2020 at 11:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An earnings restatement has investors worried about what comes next.

What happened

Bloom Energy (BE 1.23%) stock is in freefall.

Down as much as 15% in very early trading, shares of the renewable energy company found a brief foothold around $9.50 per share (down 9.2%) as of 10:15 a.m. EST, but the news here isn't good, and Bloom could fall some more.

Glowing red stock chart arrow trends down

Image source: Getty Images.

So what

What happened to Bloom stock? In a word: accounting. As in, Bloom needs to fix its accounting.

Last night after close of trading, Bloom Energy advised investors that "it will restate certain prior period financial statements due to an accounting error related to its Managed Services Agreements," through which Bloom offers sales financing to customers of its energy servers. Henceforth, revenue from these sales "will now be recognized over the duration of the contract instead of upfront."  

Bloom hastened to reassure investors that this restatement "has no impact on Bloom's total cash and cash equivalents or cash flows and the adjustment does not impact the economic terms or substance of the MSAs." The shift from up-front reporting to life-of-contract reporting, however, is almost certain to ding Bloom's revenue numbers in the short term, reducing revenues by "10% of the total revenue over the affected period for Q1 of 2016 through Q3 of 2019."

Now what

Perhaps hoping to buck up investors worried about the revenue hit, Bloom released preliminary numbers for its fiscal fourth quarter as well, noting that the company's backlog has increased by 43% year over year, adding about $1.1 billion worth of future "product and installation revenue" to its backlog.

In the company's press release, CEO KR Sridhar said, "In the second half of 2019, Bloom Energy saw strong growth in the business." Investors today, however, seem more worried about what's going to happen to Bloom after it begins reporting revenue under the new system this year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
$14.05 (1.23%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.