Shares of Bloom Energy (BE 0.91%) have blossomed in the first half of August, climbing more than 50%. The second half of the month, conversely, is beginning on a less auspicious note after the fuel cell specialist announced a partner's decision to exercise its option to purchase more shares of the company's stock, along with a new capital raise.
As of 11:12 a.m. ET, shares of Bloom Energy are down 10.3%.
After the market closed yesterday, Bloom Energy reported that SK ecoplant is exercising its option to acquire more shares of Bloom Energy's stock pursuant to an agreement the two companies forged last October. SK ecoplant has elected to acquire 13,491,701 shares of Bloom Energy's stock priced at $23.05 per share -- a discount to the price at which Bloom Energy's stock opened today: $28.60.
In further shareholder dilution news, Bloom Energy announced yesterday that it plans on raising more capital by issuing 13 million shares of its Class A common stock. In addition, the company plans on offering the underwriters of the transaction an option to acquire 1.95 million shares of Class A common stock less the underwriters' discounts and commissions.
Unable to generate organic cash flow, Bloom Energy has oftentimes chosen to raise capital through the issuance of equity. Over the past three years, for example, the shares outstanding have soared more than 52%.
The prospect of shareholder dilution is taking the charge out of Bloom Energy's shareholders after the electric ride the stock has had over the past few weeks. The company's decision to issue more shares, however, shouldn't come as much of a surprise since it hasn't proven the ability -- like many growth companies -- to generate cash organically. Likewise, it wouldn't be so shocking if the company resorts to further issuances of equity to keep the lights on in the future if it continues generating negative cash flow.