Please ensure Javascript is enabled for purposes of website accessibility

Why Bloom Energy Stock Is Sinking 5% on Monday

By Rich Smith – Updated Jul 27, 2020 at 3:27PM

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

A Barron's article cautions on fuel cell stocks.

What happened

Shares of energy-in-a-box fuel cell company Bloom Energy (BE 2.12%) are down 5.4% around 3 p.m. EDT Monday, the first trading day after a Barron's column criticized valuations in the renewable-energy sector over the weekend. 

So what

The column noted that fuel cell stocks Plug Power and Ballard Power have both quadrupled over the past year, and may be due for a pull-back. Bloom Energy is up "only" 64% in the same period -- but that's still 10 times the gain on the broader S&P 500, and may be indicative of similar irrational exuberance, but to a different degree. 

3 red arrows going down and crashing through the floor

Image source: Getty Images.

Now what

Investors are taking the warning to heart, selling off shares of all three companies today. Still, with Ballard stock down only 2.8% so far, and Plug down just a bit more (3%), the losses at Bloom Energy are nearly twice as bad. Is that fair?

It might not be.

Consider that while Bloom Energy has not yet reported a profit in the two years since its IPO, neither has Plug Power -- in more than 20 years. Ballard has earned full-year profits two or three times in its history, but not since 2008. So of the three, Bloom Energy has actually been losing money for the shortest period of time (as a publicly traded company, at least).

Moreover, while neither Ballard nor Plug is generating positive free cash flow (FCF) at present, Bloom at least was FCF-positive last year, and remains so on a trailing-12-month basis. While I can't say as I'm terribly optimistic about the prospects of any of these three companies right now, it seems to me that Bloom Energy's financials look to be the least bad among them.

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.

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
BE
$21.65 (2.12%) $0.45

*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 analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

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.