What happened

On Wednesday, things aren't looking great for investors in the renewable energy sector. At 11:25 a.m., shares of hydrogen fuel-cell companies Bloom Energy (NYSE:BE) and Plug Power (NASDAQ:PLUG) are both down significantly more than average -- 7.3% and 8%, respectively. Elsewhere in the industry, Chinese solar-module maker JinkoSolar (NYSE:JKS), which went on a tear earlier in the week, is giving back a lot of its gains -- and falling 12%.

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

What do these three stocks have in common, other than all being broadly within the "alternative energy" sector? For one thing, they're "alternatives" to oil stocks -- which is a good thing when oil is expensive and producers and consumers are all looking for not just cleaner but cheaper sources of energy.

The problem today may be that oil is not particularly expensive. In fact, according to the latest data from OilPrice.com, both WTI and Brent crude prices are down well over 3% in Wednesday trading, which makes "alternatives" to oil relatively less attractive.

In the absence of any other really bad news (analyst downgrades, earnings misses) affecting this group of stocks, more competitive oil prices seems the likely culprit for these falling stock prices -- more competitive oil prices, that is ... and valuation.

Now what

Over the past year, shares of Plug Power stock are up nearly 450%. Bloom stock has soared 565%, and even JinkoSolar, which operates in the more mature and profitable solar sector, has racked up nearly 500% gains over the last 52 weeks. And yet, the value of the businesses underlying these stock-price gains remains questionable.

In its entire 20-plus-year history as a public company, Plug Power has never once earned a net profit from its business. Bloom Energy hasn't been around as long (S&P Global Market Intelligence data on it only goes back to 2014), but it hasn't yet earned a profit, either.

For that matter, even JinkoSolar, which claims to have been profitable since 2013, has reported negative free cash flow in most years, belying its supposed "profitability." From 2013 through 2019, Jinko reported GAAP "profits" of $717 million, but its cash flow statement shows that, instead of generating cash profits, the company burned through $2.35 billion in cash losses, suggesting an exceedingly low quality of earnings at the company.

Maybe, just maybe, what we're seeing in today's sell-off is investors beginning to realize that profits matter.