Fuel cell stock Bloom Energy (BE -3.67%) is absolutely crushing the market today, skyrocketing 33.5% as of 9:35 a.m. EDT after the company struck a massive deal.
Bloom Energy's three-year-old partnership with South Korean based SK Group's affiliate SK ecoplant took a big leap Monday morning when they announced a multi-billion dollar deal.
SK ecoplant has contracted to buy at least 500 megawatts of fuel cells from Bloom Energy, estimated to be worth $4.5 billion in revenue, between 2022 and 2025.
That aside, the two companies plan to set up two hydrogen innovation centers, one each in the U.S. and South Korea, and SK ecoplant will also invest $500 million in Bloom Energy through purchases of preferred stock, after which SK ecoplant will appoint a member to Bloom Energy's board of directors.
This is, undeniably, a huge deal for Bloom Energy for two reasons: First, Bloom Energy generated only $794.2 million in revenue last year and last forecast it will generate revenue between $950 million and $1 billion in 2021. The company's deal with SK ecoplant now means much bigger revenue coming Bloom Energy's way.
Second, Bloom Energy will not only expand its global footprint through this deal, but can also use the $500 million investment from SK ecoplant to rapidly commercialize its hydrogen solutions and even possibly strengthen its balance sheet, among other things. Bloom Energy ended its second quarter with total debt worth $519.2 million.
The biggest concern for shareholders in Bloom Energy so far has been the company's inability to turn a profit yet despite counting some of the largest global companies among its customers and growing its revenue steadily in recent years. Bloom Energy's on-site energy servers are designed to provide uninterrupted power supply from renewable energy by using solid-oxide fuel cells to convert natural gas and hydrogen into electricity, and are already used by global companies like Alphabet, FedEx, and Home Depot.
With today's development, investors now expect Bloom Energy to finally turn profitable and cash-flow-positive. It's therefore not surprising to see the market bet big on the Bloom Energy shares today, especially given how they plunged after hitting all-time highs of $44.95 a share early February. With the company also expected to report third-quarter earnings on Nov. 4, this one's a red-hot stock to watch right now.