Bloom Energy (BE -8.07%) cannot catch a break.
Yesterday, the fuel cell stock had its price surge pulled back when a late-morning report from The Wall Street Journal expressed doubts about the company's ability to navigate "a rapidly changing [new energy] industry." The stock still ended up more than 10% -- it had been up 12%, and appeared to be heading higher.
Today, Bloom Energy is sharply lower -- down 14.7% as of 11:45 a.m. EST, as Wall Street investment banks begin to pile on in the wake of the Journal's report.
This morning, J.P. Morgan announced it is downgrading shares of Bloom Energy, removing its overweight rating from the stock, and cutting Bloom to neutral. On the one hand, that's not quite as bad as it may sound. J.P. Morgan actually raised its price target on the stock to $26, reports TheFly.com -- about where the stock currently trades -- and said it thinks the shares are now fairly valued.
Still, it's unlikely J.P.'s decision was entirely unaffected by what the Journal reported yesterday.
So what did WSJ report, and why is it bad news for Bloom? To recap, the newspaper basically raised three objections to Bloom:
First, that its technology (converting natural gas to electricity with CO2 and water byproducts by running the gas through fuel cells) isn't as popular as that of other fuel cell companies, which run hydrogen gas through fuel cells to generate electricity and only water as a byproduct. To address this objection -- but also to validate it -- Bloom has recently begun refocusing its efforts on developing and selling hydrogen fuel cells.
Second, wind and solar power are now cheap enough that even hydrogen fuel cells may struggle to compete profitably as alternative forms of energy production.
And third, as a result of all the above, Bloom Energy is losing a lot of money. And this is the one that really resonates with me. Investors may differ in their opinions on which "green" energy is best. One thing that is beyond dispute, however, is the fact that Bloom Energy has never reported a profit under generally accepted account principles (GAAP), and lost $196 million over the last 12 months.
Until it proves that it can not just produce clean, green energy, but do so profitably, Bloom stock will remain vulnerable to shocks such as J.P. Morgan's downgrade caused today.