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Why ConocoPhillips, Bloom Energy, and Plug Power Stocks Just Crashed

By Rich Smith - Oct 26, 2020 at 1:52PM

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And why one of these three stocks could bounce right back tonight.

What happened

It's a bad day for energy investors, a bad day for oil stocks, and even a bad day for stocks offering alternatives to oil, as shares of everyone from ConocoPhillips ( COP -2.80% ) to Bloom Energy ( BE 0.22% ) to Plug Power ( PLUG -4.25% ) have plummeted. As of 12:55 p.m. EDT, Conoco stock is taking a 6.5% hit, while Plug and Bloom are down 6.4% and 5.8%, respectively.

So what

Why are all of these stocks down? Well, ConocoPhillips has two strikes against it. First, analysts at Susquehanna Research just cut their price target on the oil major to $50 a share. It's only a $2 decrease, however, and in any case, Susquehanna says it still feels "positive" about the stock despite the reduction in price target, notes StreetInsider.com in a report today. Plus -- and this is kind of important -- Conoco stock only costs about $30 and change right now.

"Cutting" the price target to $50, therefore, isn't really such horrible news.

More worrisome than the target price is the fact that oil prices are falling again today, continuing a six-day streak of bad luck that's seen the price of a barrel of WTI crude, for example, shrink by nearly 8%. If you're a producer of oil, like Conoco, that's not good news at all.  

Oil rig superimposed on three descending red arrows

Image source: Getty Images.

Now what

It may not be great news for would-be hydrogen producers and fuel cell companies Plug Power and Bloom Energy, either. After all, these are alternative energy stocks we're talking about here, and the energy that they're providing an alternative to is oil.

The cheaper oil gets, the less incentive companies have to switch to alternative fuels like hydrogen for their power needs. Granted, there are green advantages to using hydrogen instead of oil, too, but ultimately, cost still plays a big role, and cheaper oil is therefore not a positive for these stocks.

That being said, there's also hope that, as quickly as Bloom and Plug stocks turned down, they could also turn around. Later this afternoon, after close of trading for the day, StreetInsider reports that Plug Power CEO Andrew Marsh is scheduled to appear on CNBC's Mad Money talk show -- presumably to talk up his stock.  

Depending on what he says, today's energy stock sell-off could prove short-lived, at least for Plug and the other fuel cell stocks.

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.

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Stocks Mentioned

ConocoPhillips Stock Quote
ConocoPhillips
COP
$70.13 (-2.80%) $-2.02
Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$39.85 (-4.25%) $-1.77
Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
BE
$27.48 (0.22%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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