Bloom Energy Corp. stock on Tuesday traded at a third of its initial public offering price after the clean-tech company talked down its prospects for next year on concerns that clean-energy initiatives in key states would end up hurting it.
The stock BE, -41.87% fell more than 40% to trade as low as $4.57 intraday, well on pace to close at its lowest price ever and to extend its losing streak to a seventh day, in which time it has lost half of its value.
The steep selloff was a stark reversal for Bloom Energy stock, which was up as much as 15% in after-hours trading on Monday after the company reported a narrower-than-expected second-quarter loss and revenue that beat analyst estimates.
Bloom in July 2018 priced its IPO at a top-of-the-range $15 apiece. Bloom then was a rare clean-energy “unicorn,” or startup worth more than $1 billion. The company, which makes fuel cells used in stationary power-generation servers that convert natural gas or biogas into electricity, had backtracked from a confidential IPO filing in 2016.
Chief Executive K.R. Sridhar said on the post-earnings conference call with analysts that the move by some states to achieve 100% renewables-only power “are well-intentioned, but ill-informed,” as there is no credible way to achieve that goal without compromising safety, reliability and affordability.
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Because of the “confusion,” New York and California, two of Bloom’s largest markets, have slowed down conversions. “With fewer orders from those markets in our anticipated mix for 2020, our revenue growth and margins for next year may not be in line with Street expectations,” Sridhar said.
“We have high degree of confidence that this is an anomaly that’ll correct and want to emphasize that we are bullish on these markets going forward.”
Last month, Berkeley, Calif., banned natural gas connections in new buildings, and there are moratoriums on new connections with some utilities in New York and Massachusetts, which “have only further muddied the waters” for Bloom, analysts at Cowen, led by Jeffery Osborne, said in a note Tuesday.
“Management is now in the midst of undertaking a massive education/awareness campaign to advocate the attributes of baseload power from fuel cells as well as highlight the 5-year upgrade cycle in which units can be upgraded with lower carbon solutions such as renewable hydrogen or biogas sources,” he said.
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The company continues to look for “additional input fuels” for their fuel cell systems, “especially those with a lower carbon footprint,” the analysts said. Cowen kept its equivalent of a neutral rating on the stock and $11 price target.
Analysts at Oppenheimer also remained neutral on Bloom and noted Bloom’s second-quarter earnings beat was “driven by international sales and refinancing of replacement” servers.
The analysts said they “continue to be cautious on the potential for an air pocket in sales” and lowered their full-year sales and adjusted earnings estimates “given caution about revenue ramp expectations.”
Analysts at Raymond James kept their equivalent of buy on Bloom’s stock, calling the issues with New York and California fossil-fuel phase-outs a “textbook case of ‘Green vs. Green.’”
Bloom is a “leader” in an emerging, somewhat niche value chain, the Raymond James analysts, led by Pavel Molchanov, said, and the “historically slow adoption curve of fuel cells in distributed generation is picking up pace.”
Bloom’s “differentiated technology story needs to be balanced against choppy quarterly metrics and limited financial visibility,” the analysts said. Raymond James lowered its target price on Bloom shares, however, to $12 a share from $16.
Bloom shares have lost 80% in the past 12 months, and 50% this year. That contrasts with gains of 17% and 13% for the S&P 500 index SPX, +1.64% and the Dow Jones Industrial Average DJIA, +1.56% this year, and smaller gains for the key equity indexes for the last 12 months.