What happened

Bloom Energy (NYSE:BE) 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.