What happened

Shares of fuel cell maker Bloom Energy (NYSE:BE) 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.

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.