What happened
After the company reported disappointing first-quarter 2023 financial results on Tuesday, investors expressed their disappointment with Bloom Energy (BE -1.93%) yesterday, leading the stock to close 2% lower.
Today, however, the stock is continuing to slide for other reasons. In addition to an analyst's reduced price target, the fuel cell company's announcement that it intends to offer senior convertible notes is leading investors to unplug the stock from their portfolios.
As of 10:47 a.m. ET, shares of Bloom Energy have fallen 15%.
So what
Ending Q1 2023 with $320.4 million in unrestricted cash, Bloom Energy plans on raising capital to help keep the lights on in the coming quarters. The company intends to offer $500 million in green convertible senior notes due 2028, with the option to offer an additional $75 million to the buyer. In addition to using the capital for general purposes, Bloom Energy will use the proceeds to pay off more than $57 million in debt that's due in 2027.
Another source of consternation for investors today is the lower expectations that Wall Street has for Bloom Energy's stock. Ben Kallo, an analyst at Baird, slashed the price target to $21 from $25. This follows another bearish opinion on the stock that came out yesterday from Jordan Levy, an analyst at Truist, who reduced the firm's price target to $20 from $26.
Now what
With the prospect of dilution, it's no wonder that investors are choosing to trim -- or exit completely -- their positions in Bloom Energy. Shares are down about 33% since the start of the year, but hydrogen investors who want to scoop up shares must not focus solely on the more attractive price tag. Bloom Energy has consistently failed to prove that it can generate cash organically, and until it does, investors can expect further dilution or a more debt-laden balance sheet.
