Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Bloom Energy Stock Dropped, Then Popped, on Thursday

By Rich Smith - Dec 10, 2020 at 4:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A Wall Street white knight rides to Bloom's rescue.

What happened

Bloom Energy ( BE -5.68% ) investors finally caught a break this afternoon. Two days ago, The Wall Street Journal published a critique on Bloom, explaining how the company attempted to disrupt the power grid by offering energy users the option of producing their own power on-site, but ended up getting disrupted itself when cheaper, more efficient forms of distributed energy production emerged.

Bloom stock sank 18% in response to that article, and at first appeared poised to go lower again today, sinking 5% in early trading. But then it recovered, finishing the day up 3%, and investment bank Johnson Rice had something to do with that.

Green up arrow button and red down arrow button

Image source: Getty Images.

So what

In a note just 15 words long, reports that Johnson Rice initiated coverage of Bloom stock yesterday, about 20 minutes after Bloom shares had closed down heavily. There's little detail on precisely why Bloom won Johnson's favor, although the fact that the stock was suddenly 18% cheaper probably had something to do with it.

Whatever the reason, Johnson Rice now rates the stock "accumulate," with a $32 price target implying there could be as much as 23% upside in the shares.

Now what

Is Johnson Rice right about that? On the one hand, Bloom is the only fuel cell stock to have generated appreciable free cash flow from its business anytime in recent memory (about $113 million last year).

On the other hand, 2020 hasn't been as kind to Bloom. Through the first nine months of this year, it has already burned through $113 million in negative free cash flow. And in contrast to all its renewable energy peers (Plug Power, FuelCell Energy, and Ballard Power), Bloom's sales through the first three quarters of this year are actually down about 5% in comparison to last year.

So although Bloom stock is cheaper today than it was a few days ago, maybe it deserves to be.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
$24.72 (-5.68%) $-1.49

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.