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Why Bloom Energy Stock Dropped 5% This Morning

By Rich Smith – Jul 20, 2020 at 11:14AM

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Insiders appear to be cashing out.

What happened

Shares of fuel-cell company Bloom Energy (BE -1.01%), which enjoyed great popularity for much of last week after announcing plans to partner with a Korean company to produce hydrogen gas for use in fuel cells, took a sharp turn southward in Monday trading, falling more than 5% by 10 a.m. EDT.

Investors may be twigging to the fact that on Friday, Bloom Energy made a series of Form 4 filings with the SEC, advising that three top executives -- the company's chief operating officer, chief technology officer, and executive vice president of customer installations -- sold a total of 370,964 shares of common stock on July 15.  

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

Are these sales significant? Honestly, it's hard to say. SEC filings show that Bloom Energy execs routinely file a lot of Form 4s -- more than two dozen in the last three months -- both acquiring shares as grants and liquidating them to raise cash. Viewed in that context, the revelation of stock sales isn't really all that out of the ordinary. Viewed in the context of the shares' near-150% rise over the past three months, however, it may appear to some investors that insiders are cashing out and taking profits after the stock's steep run-up.

Such sales may be interpreted as implying that Bloom Energy's run-up in share price was unjustified.

Now what

In such a case, it's natural that the sales might make alternative energy investors nervous. It's also natural that they'd follow the lead of Bloom insiders and head for the exits today. The best thing Bloom could do to calm the market, I suspect, is a figure out a way to earn a profit from its business.

Unfortunately, according to analysts following the company, that's not likely to happen before 2023 at the earliest.  

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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