Bloom Energy's (BE -1.69%) fuel cells run hotter but should be lower-cost than competing fuel cells from Ballard and Plug Power, and they can basically run forward and backward. In this Fool Live segment from "The High Energy Show," recorded on Feb. 15, Motley Fool contributors Travis Hoium and Jason Hall take a closer look at Bloom Energy's green hydrogen technology and strategy.
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Travis Hoium: Bloom Energy just reported earnings last week, and this is a company, there was a few questions in Slido about this, I think this is going to be a decade away. Bloom Energy is doing almost a billion dollars in revenue, and last year grew revenue 22 percent, 4th quarter grew 37 percent. This is a real business and they are now turning the corner to profitability if we take a look at the chart here, this is a revenue and margins are improving, that's because their costs are coming down, and they're basically getting to the point where they're reaching scale. The reason that I like them from a technology perspective is they are a solid oxide fuel cell, which basically means their fuel cell, they run hotter, but they should be lower-cost than competing fuel cells that Ballard and Plug Power make, and they can basically run forward and backward.
We talked about how this is going to be basically a piece of infrastructure for commercial buildings, for utilities. If all you have to do is plug in electricity and water to your Bloom fuel cell and then attach a hydrogen tank, and you can run at one direction to perform electrolysis and store hydrogen, and then when you need that electricity, run at the other direction and produce electricity, that's a really attractive business model. Now, we are very early in their development as far as commercializing this, and they basically just outlined their hydrogen strategy. They have been, typically, a gray hydrogen company doing fuel cells. They outlined their green hydrogen strategy in fall 2020, I believe it was, and that's the company that I showed the charts earlier. Their timelines are 2025, 2030. This could potentially be a really revolutionary company, it is also very high risk, along the lines of Nikola except that there is currently real business there. They are partnering with countries like South Korea, selling to companies like Apple. There is something substantive here with the potential for a lot of growth in the future.
Jason Hall: I think of the pure-play hydrogen plays, Bloom is probably the safest. I think if you own it for five or 10 years, your chance of permanent loss of capital is probably pretty low, I really think that's the case because they have a real business, and you look at Plug and FuelCell and some of these others, they are spending so much money and constantly having to reraise capital, very different risk profile.
Travis Hoium: To put some numbers there, Bloom Energy's price to sales ratio is 3.7
Jason Hall: Right.
Travis Hoium: Ballard's is 30.
Jason Hall: Right.
Travis Hoium: Plug Power's is almost 400.
Jason Hall: [laughs] Yeah.
Travis Hoium: It's crazy to me that the most solid business out of those three is also the cheapest.
