Shares of Bloom Energy (NYSE:BE), which makes fuel cells, were down as much as 15% through Thursday this week. That said, the stock had managed to pare down that loss a touch to “just” 12.5% as the close of the trading day neared on July 8. That’s not particularly great news, but sharp ups and downs aren’t uncommon here, which actually helps to fill out the story.
The key is to pull back and look at the bigger picture. Bloom Energy stock has rallied since the week of May 10, rising by more than 40% at one point. So the drop so far this week is something of a giveback on that advance, with the shares now up by around 15% since the rally began.
The price reversal actually started on June 28 and continued into the current holiday-shortened week. There’s been no particular news over that time from the company that would seem to have caused such a move, so it’s likely that Mr. Market and his normal gyrations are responsible.
Bloom Energy is an interesting clean-energy play that’s still trying to build a sustainably profitable business. That often results in mercurial investors pushing its stock up and down for what appears to be little reason. That said, progress is being made on a fundamental level.
For example, in the first quarter, the company’s adjusted loss was $0.07 per share, which was a vast year-over-year improvement from the first quarter of 2020 when it lost $0.34 per share. While the last year or so has hardly been a normal period of time, given the global coronavirus pandemic, Bloom Energy believes cash flow from operations is on track to “approach positive” in 2021 with revenues perhaps reaching as much as $1 billion.
In other words, things continue to move forward at the business level as the company looks to establish its fuel-cell technology with a growing list of customers.
Bloom Energy isn’t a great option for risk-averse investors, given that its fuel-cell technology is still in the early stages of acceptance. That said, for those looking at clean-energy stocks, it could be worth a deep dive.
Just go in knowing that, despite the progress being made, profitability is still off on the horizon. That suggests that stock-price volatility like we’ve been seeing over the past month or so and the past week is likely to remain an ongoing issue.
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