Bloom Energy (NYSE: BE)
Bloom energy makes and sells solid oxide fuel cells that produce electricity on-site for pretty much any kind of company. It has already turned some of the world’s largest organisations into its clients The company was founded in 2001 and is based in San Jose, California. It came out of stealth mode in 2010 and raised more than $1 billion in venture capital funding before going public in 2018. The company is considered a growth stock and is currently focused on expanding its customer bases and revenues. With most of the world looking to shift to renewable energy, as a result of high oil prices, all eyes are on companies like Bloom Energy that’s now seen a 91% increase in the hype over the last day. It’s currently trading at $16.69 per share.
Positive Hype
Bloom Energy is a company with solid foundations in the renewable energy space and has lots of reasons that may generate positive hype. Here are some of them.
Despite a recent sell-off, Bloom is gaining 5.2% and is trading well above the price it was left at after the drop (which was $15.66). The company has solid fundamentals and still continues to grow despite blips like this.
The hydrogen market is still growing by leaps and bounds and is predicted to average 23.4% compound annual growth through 2025, with Bloom being one of the biggest leaders, it stands to gain heavily from this expansion.
With the Biden administration all set to pump billions of dollars into building green hydrogen hubs and a 500,000-charger EV charging network in the U.S. under the bipartisan infrastructure bill, Bloom stands to gain governmental support to expand business ventures super soon as well.
Bloom Energy's top line crossed the $1 billion mark in 2021, and management believes it could generate $15 billion to $20 billion in annual revenue by 2031.
Bloom Energy isn't profitable yet, but it's earning a positive gross margin and expects to generate positive cash from operations this year.
Additionally, according to S&P Global Market Intelligence, Bloom might turn profitable under generally accepted accounting principles (GAAP) as early as 2024. That makes now the perfect time to take a position in the company.
Negative Hype
Not all investments are all good, and it is incredibly important to consider the bad news and downsides to making an investment before you take a position. Here are some of the drawbacks causing Bloom Energy to gain negative hype too.
Bloom Energy had $280 million in long-term debt as of March 31st and reported a loss of $78 million for the quarter.
Moreover, higher costs, regardless of where they stem from (labour, interest expenses or other sources) all make it tougher for the company to operate and transition into making profits.
Lastly, unfavourable market sentiment toward growth stocks and bearish takes on Energy companies like Bloom has caused analysts to lower price targets. However, this may mean that shares will remain cheap for long.
Conclusion
As long as the economy looks to be at risk of slipping into a recession, hydrogen stocks will continue to be volatile, and any rebound in their prices could just be a "dead cat bounce" until they can prove their growth stories are intact. However, on the bright side, it’s the perfect time to invest when prices are low since Bloom has solid fundamentals and is a leader in the market moving towards using renewable energy resources. If you’d like to get more trending stocks direct to your inbox, check out our premium plans. Alternatively, head over to our FAQ page if you want to learn more about the services offered by HypeIndex.
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