What happened

Shares of energy-in-a-box company Bloom Energy (NYSE:BE), formerly up 80% year to date, are taking a breather today. They dropped 8.6% as of 2:05 p.m. EST, after being down more than 10% earlier in response to a downgrade from Raymond James Financial.

So what

Raymond James is actually a fan of Bloom Energy -- and of investing based on "environmental, social, and governance" (ESG) in general. But as its analyst explains in a note out on StreetInsider.com today, Bloom Energy's "phenomenally strong start to 2020," racing ahead three times as fast as the "clean tech" index as a whole, is enough reason to take a step back while we wait for earnings to come out.

"This is a straightforward valuation-based downgrade," says the analyst, complaining that "Bloom has reached a level where we are no longer comfortable recommending it."

Blackboard drawing of an arrow going up, getting erased, and coming back down

Image source: Getty Images.

Now what

That's putting it mildly. Put aside the fact that it's hard to argue Bloom Energy is worth 80% more today than it was less than two months ago, without some reason (such as an earnings report) to think the company's value has increased.

Bloom Energy is almost impossible to value accurately right now because it has never earned a profit. The stock sells for just 1.8 times sales, which could be an argument in its favor. But so long as Bloom Energy has a profit margin of negative 31.9% -- losing $0.32 for every $1 in sales it brings in -- I'm not sure even applying a price-to-sales valuation to this stock is much help.

Until Bloom proves itself capable of earning a profit at least once, investors -- along with Raymond James -- are right to be cautious.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.