The stock market is melting down, with the Dow Jones Industrial Average facing its worst monthly performance since March and the S&P 500 off 1.7% -- and renewable energy stocks are taking it on the chin.
In 11:55 a.m. EDT trading, shares of hydrogen fuel cell company Bloom Energy (NYSE:BE) fell a staggering 14%, while rival Plug Power (NASDAQ:PLUG) sank 5%. Elsewhere in the sector, solar microinverter maker Enphase Energy (NASDAQ:ENPH) racked up a 6.2% loss -- and I worry that Bloom may be the cause of it all.
Oh, there are other reasons for stocks to be down today, of course. The latest coronavirus numbers out of Johns Hopkins University are downright depressing, showing the U.S. marching inexorably toward 9 million total infections with a current death toll of 229,000. Election uncertainty in the coming presidential contest probably has investors on edge as well, and with the Senate now adjourned until after the election, the chances of a new fiscal stimulus before 2021 look pretty poor.
But as far as news concerning renewable energy stocks in particular goes, there's really only one headline investors can be reacting to today: Bloom Energy's earnings.
Releasing preliminary numbers for Q3 last night, Bloom confirmed that it probably lost $12 million last quarter, or about $0.04 per share pro forma -- less than Wall Street had predicted it would lose. On the other hand, Bloom's sales for the quarter seem to have amounted to no more than $200.3 million, which works out to nearly 10% less revenue than the $221.2 million that Wall Street had forecast for it, and an 11% decline year over year.
Bloom's weak revenue performance is certainly disappointing, but does that justify selling off not just Bloom stock, but the entire renewable energy sector?
On both counts, I have my doubts. Firstly, Bloom didn't lose as much money as analysts had feared, despite the revenue slowdown. The company also cut its cost of goods sold about twice as fast as its revenue fell, and grew its adjusted gross margin nicely, up 710 basis points year over year. While I'd prefer to see Bloom's latest cash flow data before rendering final judgment, the quarter simply doesn't look as bad to me as some other investors seem to be interpreting it.
And as for Bloom's report having knock-on effects on the other renewable energy stocks, well, Plug Power hasn't reported its Q3 earnings yet. Those aren't due until next week. Analysts aren't expecting Plug to be profitable, either -- but that's never stopped investors from loving Plug stock before. Enphase, meanwhile, has reported earnings, and with the company reporting better-than-expected sales and earnings Tuesday, there was good news aplenty in that report.
I honestly don't think that a bit of bad news from Bloom -- moreover, bad news with a certain amount of good news mixed in -- makes for a good reason to sell Enphase stock today.