Avoid Bloom Energy Stock Despite Recent Correction

BE: Bloom Energy logo
BE
Bloom Energy

Bloom Energy stock (NYSE: BE), a company that sells solid oxide fuel cells for electricity generation, has declined by about 30% over the last month (around 21 trading days), underperforming the S&P 500 which remains down by 9% over the same period. While Bloom stock saw some traction earlier this year, driven by strong quarterly results and rising interest in alternative energy products following Russia’s invasion of Ukraine, there are a couple of factors that have likely impacted the stock recently. The Federal Reserve has continued to raise interest rates as it looks to combat stubbornly high inflation and this has hurt Bloom, which is still viewed as a relatively speculative bet. Late last month, the U.S. central bank raised its benchmark rates yet again by 0.75%, taking the Federal Funds rate to over 3%, from just about 0.25% at the beginning of this year. Separately, there has also been some insider selling in Bloom stock, and this could be weighing on the stock price to an extent.

Given that BE stock is down 30% over the last month, will it continue its downward trajectory, or is a recovery imminent? Going by historical performance, there is a higher chance of a decline in BE stock over the next monthOut of 114 instances in the last four years that BE stock saw a twenty-one-day decline of 30% or more, 52 of them resulted in BE stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 52 out of 114, or a 46% chance of a rise in BE  stock over the coming month, implying that BE stock may not be a good bet in the near term. See our analysis on Bloom Energy Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last four years’ data

  • After moving -10% or more over a five-day period, the stock rose in the next five days on 49% of the occasions.
  • After moving -16% or more over a ten-day period, the stock rose in the next ten days on 43% of the occasions.
  • After moving -30% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 46% of the occasions.
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This pattern suggests that there is not a very strong chance of a rise in BE stock in the near term.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BE Return -10% -18% 80%
 S&P 500 Return 2% -24% 63%
 Trefis Multi-Strategy Portfolio 3% -24% 200%

[1] Month-to-date and year-to-date as of 10/9/2022
[2] Cumulative total returns since the end of 2016

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