Shares of Bloom Energy (NYSE:BE) plummeted on Monday and were down a whopping 10.9% as of 3 p.m. ET as multiple developments combined to put the fuel-cell stock under tremendous pressure.
I'll start with the first reason, which also appears to be the most obvious reason behind the drop in Bloom Energy shares today: Sell the news.
Bloom Energy shares rocketed alongside rivals last week after the highly anticipated passage of an infrastructure bill. Although the $1.2 trillion bipartisan bill is much smaller than President Joe Biden's originally proposed infrastructure spending plan, it nonetheless places strong emphasis on alternative energy.
Biden is about to sign the bill into law at a signing ceremony today, and that news is mainly why the market is dumping Bloom Energy shares. The stock, after all, had a huge run-up in recent weeks before today's fall, and traders have just found an opportunity to book some profits.
But wait. There's more: Traders aren't the only ones selling Bloom Energy shares -- company insiders are selling them as well. And that's reason number two for today's drop.
Regulatory documents filed by Bloom Energy last Friday reveal at least two insiders separately sold chunks of Bloom Energy shares at prices ranging from roughly $33.16 to $35.48 between Nov. 9 and Nov. 11. There's often a knee-jerk reaction to stock prices on insider selling, especially if the stock had rallied in the days prior.
To add salt to the wounds, oil prices declined today on expectations of rising supplies. And that's another reason why Bloom Energy's stock took the plunge. As is typically the case, clean energy stocks often fall on the days when oil prices fall; lower oil prices are seen as making alternative energy sources less competitive. This came on a day when investors got a whiff of rising competition in the green hydrogen industry when one of Europe's leading renewable energy companies announced on Monday morning its plans to expand production of green hydrogen. The news sent Bloom Energy rival shares lower as well.
There's no denying clean energy is the future, and I believe Bloom Energy's business looks economically viable and compelling. It uses solid oxide fuel cells to convert clean-energy sources like natural gas and hydrogen into electricity on servers that can provide an uninterrupted power supply. That makes the company an intriguing play on two of the biggest challenges in the world: the dire need to switch to clean energy and the need to secure reliable power-supply sources in the wake of more power outages and severe weather conditions.
With Bloom Energy also recently winning contracts worth multibillion dollars in revenue, the stock could soon bounce back as the company's customer base grows.