Bloom Energy – 30 percent steady annual growth

Investment bank J. P. Morgan’s analyst meeting with KR Sridhar, Bloom Energy’s chief executive, on May 26 revealed bright prospects for the company. When one analyst asked by how much Bloom wants to grow in the near future – if it aims for a rate of 20 percent to 25 percent annually – Sridhar replied the target is rather 30 percent a year over a long period of time. He based his assessment on an analysis of the company’s advanced technology, IP portfolio, markets and applications, as well as its competitive position, expertise and experience.

Bloom, he added, is well equipped to provide onsite electricity via its own fuel cell-based power systems. They are up and running nearly 99.9 percent of the time, are secure, even against hacking, inexpensive, reliable, and resilient to environmental hazards and disasters, e.g., wild fires, storms and cold weather. Plus, they supply clean electricity. They can also take a variety of input fuels, ranging from natural gas, LNG and biogas to hydrogen. Sridhar wants this list to be understood chronologically. That means hydrogen-fueled systems will come. But other gases will remain in use – at least, for the time being. Blends are possible too.

Bloom’s customer base includes several big corporations, operators of huge server farms, hospitals and university campuses. All of them require electricity and energy supplies. That benefits Bloom while giving its customers more freedom from the public grid via new platform technology. Sridhar said the company is now able to generate electricity for USD 0.09 a kilowatt-hour. That’s definitely much cheaper than a power outage caused by a failing grid.

Additional growth is said to come from sales in new markets. Sridhar noted Bloom is expanding rapidly as “grid costs are coming down.” Step by step, oil is being displaced by hydrogen. Bloom’s plans include constructing 20-megawatt fuel cell power systems with a daily production capacity of 20 tons of clean hydrogen. At some point in the future, it expects to build one such system a month. Projects that competitors are just sketching out Bloom already has in its pipeline, ready to implement, Sridhar added. He further expects the price of hydrogen to fall to USD 2 and create a global market worth USD 10 billion a day.

As for first-quarter results, Bloom’s revenue grew to USD 194 million, up 24 percent year over year. The non-GAAP gross margin increased from 16.2 percent to around 30 percent in the same period, mainly driven by a product gross margin of 36.7 percent. That works out to a:net loss of USD 0.15 a share on a GAAP basis and USD 0.07 based on non-GAAP. Yearly revenues are expected to reach close to USD 1 billion. The question now is whether Bloom can increase annual production capacity from 400 megawatts to 1 gigawatt. The company is on the right track, Sridhar said, ahead of the competition, thanks to “compelling competitive advantages that are unique to Bloom.” Those advantages could also help Bloom finally get into the black this year.

… Read more in the latest H2-International e-Journal, May 2021

Risk warning

Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small- and mid-cap businesses, which means their stocks may experience high volatility. The information in this article is based on publicly available sources, and the views and opinions expressed herein are those of the author only. They are not to be taken as a suggestion of what stocks to buy or sell and come without any explicit or implicit guarantee or warranty. The author focuses on mid-term and long-term prospects, not short-term gains, and may own shares in the company or the companies being analyzed.

Author: Sven Jösting, written June 1st, 2021

Leave a Reply