Please ensure Javascript is enabled for purposes of website accessibility

Why This Top Fuel Cell Stock Tanked in July

By Rekha Khandelwal – Aug 3, 2021 at 8:16AM

Key Points

  • Despite the recent fall, fuel cell stocks are trading at much higher prices than a year ago.
  • Investors' enthusiasm for clean energy stocks has pushed valuations higher.

Motley Fool Issues Rare “All In” Buy Alert

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

Investors continue to focus on risks and high valuations of fuel cell stocks.

What happened

Shares of fuel cell maker Bloom Energy (BE 3.10%) plunged 18.9% in July, according to data provided by S&P Global Market Intelligence. Investors seem to be booking some profits in the stock, which is still up 75% in a year.

So what

An increased focus on clean energy in the last couple of years from governments and environmental bodies captivated investors' attention, too. Stocks of companies focused on clean energy soared significantly as a result. This caused drastically high valuations in some cases, with investors questioning if the share prices and valuations have gotten a bit ahead from what the companies' fundamentals warrant. Investors also seem to be focusing on risks relating to emerging clean energy technologies such as fuel cells.

Hydrogen energy storage, solar panels, and wind turbine with sky in background.

Image source: Getty Images.

All fuel cell stocks, including Bloom Energy, have seen some correction this year. This trend continued in the last month. Notably, Bloom Energy stock fell less compared to Plug Power and FuelCell Energy, which were down 20.2% and 28.9%, respectively, in July.

Now what

Bloom Energy entered a partnership with renewable energy technology company Heliogen last month. The companies together plan to produce green hydrogen using only concentrated solar power and water. Moreover, Bloom Energy announced a 4.2-megawatt project in South Korea with its partner SK ecoplant (formerly SK Engineering and Construction). Bloom Energy stock also got an upward price target revision from J.P. Morgan in July.

All the above positive news explains why Bloom Energy stock fell less compared to its peers in July. Yet these were not enough to allow the stock to escape from the negative momentum around fuel cell stocks in general during the month. In addition to profitability and valuation concerns, increasing competition also impacted fuel cell stock prices in July.

Fuel cell companies have yet to prove they can generate sustainable profits through their products. Until such time, the stock prices will likely remain volatile. Fuel cell stocks, including Bloom Energy, face risks. Still, Bloom Energy stock looks comparatively better in terms of progress on key financial metrics, as well as valuation. Investors should gain further insight into the company's progress when it reports its second-quarter results on Aug. 4.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 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 Corp Stock Quote
Bloom Energy Corp
$21.29 (3.10%) $0.64
JPMorgan Chase & Stock Quote
JPMorgan Chase &
$138.18 (1.19%) $1.62
FuelCell Energy Stock Quote
FuelCell Energy
$3.46 (8.12%) $0.26
Plug Power Stock Quote
Plug Power
$15.96 (7.11%) $1.06

*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 analyst team.

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 12/01/2022.

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

Premium Investing Services

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