Bloom Energy (BE) : stock tanks as short seller calls for its demise

• Subject of a cautious, short report from Hindenburg Research. The stock, which has not posted a substantial recovery since dropping in mid-August after issuing cautious 2020 guidance, again sinks to new all-time lows.

 

** 4 months later **

Shares of Bloom Energy Corp. careened toward a record low Tuesday after a short seller said it uncovered billions in liabilities and called the clean-energy company an “obvious bankruptcy candidate.”

Bloom Energy BE, -24.22%  stock fell more than 20% to all-time intraday low of $3.15. It was down 90% from a Sept. 26, 2018 high of $35.80, and 80% lower than its July 2018 initial public offering price of $15.

Short seller Hindenburg Research said it found an estimated $2.2 billion in undisclosed serving liabilities.

“Bloom’s tricky accounting allows it to mask servicing costs and shift write-downs to other periods, thereby avoiding recognizing major recent additional losses,” Hindenburg said in a research note. “We believe that large debt maturities in 2020 and 2021, amounting to nearly $520 million, make Bloom Energy an obvious bankruptcy candidate.”

The company “will become yet another tombstone in the Silicon Valley cemetery of dead unicorns,” Hindenburg said.

“We strongly disagree with the conclusions drawn,” Bloom said in a statement later Tuesday. “In particular, the service replacement liability mentioned in the report is grossly misleading. Bloom Energy will make a further statement on this topic in due course.”

The analysts at Hindenburg did not engage with the company, Bloom added.

Bloom makes solid oxide fuel cells that are used in on-site, stationary power-generation servers. The servers convert natural gas or biogas into electricity through an electrochemical reaction, which results in lower emissions, the company says.

Bloom Energy’s shares fell 43% on Aug. 13 on concerns that clean-energy initiatives in key states, such as bans or halts in new natural-gas connections, could end up hurting the company.

Hindenburg claimed that Bloom’s technology is “not sustainable, clean, green or remotely profitable.”

Bloom priced its initial public offering last year at the top of the range. It slid below the IPO price by late 2018. It closed above the IPO price just four times this year, the last time on May 3. It has traded in the single digits since early August.

The shares are down more than 67% this year, contrasting with gains of 20% for the S&P 500 index SPX, +0.04%