Bloom Energy – Price turbulence due to outlook 2020

The reports are coming thick and fast: Chinese companies and some provinces are planning to initially invest US$17 billion in hydrogen technology.
Permanent energy supply with green electricity using Bloom-Boxes, © Bloom

The reports are coming thick and fast: Chinese companies and some provinces are planning to initially invest US$17 billion in hydrogen technology. A master plan already provides for 1 million FC vehicles on the country’s roads in 2030.

Dr. Wan Gang, Chairman of China’s Technology Council (higher ranking than a minister), now clearly prioritizes the fuel cell over the battery for future mobility and complementary clean green energy issues. It was he himself who originally gave the battery the necessary support that made China a global pioneer and led to the dramatic rethinking of the global automotive industry. And also in Germany there is finally movement in this topic, although still many politicians and business representatives (example VW) connect electro-mobility one-sidedly with the battery and expect only in five to fifteen years the break-through of the fuel cell, which seems to be a gross misjudgement.

The situation was turbulent on 13 August, after the figures for the second quarter of 2019 were published and fully in line with expectations: 234 million US-$ turnover (previous year: 168 million) and a loss per share of $0.13 (previous year: loss of $0.27). The statement of the CEO that growth in 2020 may not be in line with current forecasts, as important markets in California and New York are unfortunately expected to rethink the use of regenerative energies, made us sit up and take notice. As a result, the share price fell by 45 percent to approximately US$ 4.50 in just one meeting. Just think: the company has a good US $ 310 million in the bank, which is more than 50 percent of the stock market valuation. And the sale of FC power plants will bring another $200 million. A typical Wall Street exaggeration.

Duke Power acquires some of Bloom’s own fuel cell power plants from Bloom. Bloom thereby obtains new, additional capital, which also generates income from the sale of electricity (PPAs) and heat, among other things. Bloom will know why you need the capital generated from the sale. The purchase price is estimated at over US$ 200 million. The already high liquidity of more than US$ 300 million will thus probably be expanded not insignificantly. Conclusion: The outlook has not changed. The massive decline in the share price makes it advisable to buy additional shares or to reduce the price of existing positions.

Risk warning

Every investor must always be aware of his own risk assessment when investing in shares and also consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid-caps, i.e. they are not standard stocks and their volatility is also much higher. This report is not a buy recommendation – without obligation. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on a medium- and long-term valuation and not on a short-term profit. The author may be in possession of the shares presented here.

Author: Sven Jösting, written mid of August 2019

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