What happened

After a rocky start, stock market indexes are turning things around in the afternoon Thursday, and the Nasdaq as a whole is up close to 1%. Not everyone is feeling the love, however, and three alternative energy stocks in particular are looking particularly hard hit.

As of 12:30 p.m. EDT, shares of hydrogen fuel cell company Bloom Energy (NYSE:BE) are down 4.3%. Solar panel installer Sunrun (NASDAQ:RUN) is running in reverse, too, down 2.5%. And Kensington Capital Acquisition (NYSE:KCAC), the special purpose acquisition company (SPAC) that will bring public Bill Gates-backed solid-state lithium battery producer QuantumScape is getting drained 2.8%.

Collage of windmills solar panels and electric lines representing the renewable energy industry

Image source: Getty Images.

So what

What lies behind these declines?

The renewed popularity of SPACs like Kensington has upended the IPO market this year. So far this year, IPOs have raised some $91 billion in new money, reports The Wall Street Journal, breaking a record last set in 2000. Nearly half of this money, however, was raised not through traditional IPOs, in which detailed prospectuses are laid out for investors to review and consider before buying in, but via SPAC-sponsored reverse mergers, in which a blank-check company, which is already listed on the public markets, buys a private company that is not -- and magically transforms the latter into a publicly traded stock.  

On the one hand, these SPAC-IPOs have delivered some tremendous returns to investors who bought them already. On the other hand, though, in comments voiced in CNBC this morning, SEC chair Jay Clayton seemed to voice worries about the disclosures investors are receiving from SPACs like Kensington.

Clayton applauded how SPACs are bringing "competition to the IPO process," reports TheFly.com. But Clayton said he worries investors may not be getting a clear picture of "the incentives and compensations ... SPAC sponsors" receive when a company goes public via SPAC, or how much the shares they are getting via such non-traditional IPOs are actually worth.

Now what

This seems to imply a willingness of the SEC chair to tap the brakes on authorizing future SPACs -- or perhaps worse for some of these companies, to shine a bright light on any defects the SEC discovers in the disclosures of companies that have already gone public.

Many of the SPACs that have come public this year (like Kensington) are involved in the alternative energy space. The more warts that are discovered there, the more investors may begin to suspect all is not well in other alternative energy stocks, too, which have been enjoying their own strong run this year.

With none of Bloom, Sunrun, or Kensington currently profitable, such that their valuations can be objectively justified, this could leave all three stocks vulnerable to the negative publicity of SEC inquiries into the sector. Just the hint of this threat from the SEC may be the cloud that's hanging over the alternative energy sector today, preventing these stocks from joining in Thursday's rally.