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Why Bloom Energy Stock Just Dropped

By Rich Smith - Feb 11, 2021 at 1:17PM

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Bloom wasn't supposed to lose money last quarter. It lost money anyway.

What happened

Shares of fuel cell pioneer Bloom Energy (BE 2.75%) are sliding Thursday, down 3.6% as of 12:45 p.m. EST after the "energy in a box" company reported a much bigger loss than anticipated, despite beating expectations for sales.  

Heading into earnings last night, analysts had predicted Bloom would break even on sales of $235.3 million in its fiscal fourth quarter of 2020. Instead, Bloom had to fess up that it lost $0.08 per share, despite booking sales of $249.4 million.  

White arrow declining sharply atop a stock tickertape display bathed in red

Image source: Getty Images.

So what

Bloom's sales in the fourth quarter of 2020 grew 17% in comparison to last year's Q4, capping off what had up until now been an unimpressive year in which total sales grew only 1% ($794.2 million by year-end).

As already mentioned, earnings-wise, the company lost $0.08 per share in Q4 -- and that was only the pro forma number. When calculated according to generally accepted accounting principles (GAAP), Bloom's quarterly losses turn out to actually have been twice as big: $0.16 per share. Still, this was an improvement over last year, when Bloom lost $0.58 in Q4.

For the full year, Bloom lost $1.14 per share according to GAAP, cutting its 2019 losses by more than half.

Now what

Now what's next for Bloom? Management predicted that 2021 will see Bloom rake in between $950 million and $1 billion in total sales, on par with analyst expectations. The company didn't give a lot of detail on its hopes for profitability, but said its operating profit margin -- its pro forma operating profit margin -- might be 3%, and that cash from operations will be "approaching positive."  

I don't know about you, but the way I read that is this: Bloom will lose money again in 2021, and it will almost certainly continue burning cash. And I've a hunch that is why Bloom stock is down today.

This article represents the opinion of the writer(s), 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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