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Bloom Energy (BE) Soars Following Booming Market Debut

Published 08/01/2018, 10:42 PM
Updated 07/09/2023, 06:31 AM

The alternative energies industry was uproarious after the fuel-cell business Bloom Energy (NYSE:BE) enjoyed a thriving debut on the market that saw share prices beating expectations and soaring once trading began. The Sunnyvale, California-based company is hoping that its ambitious and innovative way to deliver energy to consumers will power a continuous rise in the market, but some skeletons in the closet should give investors pause before they throw their full heft behind Bloom Energy.

Here’s a rundown of Bloom Energy’s IPO, the fundamentals driving the company forward, and what investors are talking about after its market debut.

It’s a bright summer for Bloom Energy

It wouldn’t be fair to talk about Bloom Energy’s impressive IPO without beginning by noting that the company beat all expectations, reaping in tens of millions more than many critics expected it to. Bloom originally intended to offer investors some 18 million shares at a price range of $13 to $15 apiece, which some critics dismissed as being a lofty figure, given the company’s reliance on fuel-cell technology that’s not exactly known for its popularity. Investors were loving what Bloom Energy had to offer, however, and the company soon saw share prices zoom past the $15 apiece marker, ultimately reaping in more than $270 million in an IPO that values the firm north of $2 billion.

At one point, shares closed up by more than 65 percent, and even after slightly falling on Thursday, Bloom’s share prices have consistently been resting well-above the highest expected range price of $15 each. While the final results of Bloom Energy’s thriving market debut beat many of the expectations laid out in the company’s prospectus, its executives where wholly unsurprised, and leveraged the success from the IPO to discuss how profitable they feel Bloom will be in the near-future.

Following Bloom Energy’s market debut, for instance, its CEO made a bold prediction that the company would soon be profitable, doubtlessly sending many shareholders home happy. Some skeletons in the closet could seriously dampen Bloom Energy’s impressive performance thus far, however; the fuel-cell technology that the company is pioneering in devices such as Swatch Watches, for instance, is relatively unproven compared to many other alternative energy sources. Similarly, Bloom Energy has been heavily dependent on subsidies granted to the fuel-cell innovator by state governments, especially in California, where it’s based.

Critics have openly noted that Bloom Energy wouldn’t be anywhere near where it’s at today if it hadn’t been for the extensive subsidy regime offered to the fuel-cell provider by California’s government. Regulators are questioning whether Bloom Energy’s fuel-cell technology should be allowed to receive green energy subsidies, especially since they haven’t necessarily generated the astonishing environmental results that were promised.

Bloom needs to get off of state welfare

If Bloom Energy wants to win over the confidence of investors in the long-term, it should begin by convincing them that it doesn’t need to rely on state welfare to survive and thrive in the market. While many investors will understand that the high costs of entry into the alternative energies industry necessitates the occasional subsidy, Bloom Energy’s unique reliance on extensive grants to power its innovations should be worrying, even to its biggest fans.

The Institute for Energy Research noted that much of Bloom Energy’s popular name and enticing, environmental-friendly tech is likely nothing more than smoke and mirrors, for instance. A few years ago, a report detailed how Bloom Energy’s “Bloom Boxes” claimed to represent the future of energy production, but ultimately fell far short of what was promised in terms of results. Bloom Energy’s track record on the market thus far can thus be called into question by investors who are considering the words of industry analysts, which could stymie future growth.

Still, the alternative energy supplier has serious potential, if not thanks to the greener nature of its fuel-cell innovations alone. The market is going gaga for green energy right now, and companies like Bloom Energy can tap into that frenzy for financial rewards. If Bloom is ever going to become the financially-independent champion of the environment that it’s marketing itself as, however, it must do more to get stop relying entirely on state subsidies and produce more concerted environmental results. In today’s market, a failure to follow through on your promises can fairly be the death of even the most valuable companies. Bloom Energy’s $2 billion valuation and the hefty sums of cash from its IPO will doubtlessly help the fuel-cell provider going forward, but it has serious issues when it comes to producing a viable alternative to fossil fuels that investors can bank on. Despite the positive press surrounding Bloom Energy thanks to its successful market debut, keep a close eye on its finances and reliance on subsidies if you intend to back it at the races.

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