Bloom Energy stock has suffered a $40 billion wipeout: what next?

Bloom Energy stock is moving from bad to worse as it crashed to $206, its lowest level since April last year. BE has slumped by over 40% from its all-time high as concerns about its valuation and the data center industry remained. This retreat has seen its market capitalization fall from $98.7 billion to $58 billion.

Bloom Energy stock has plunged as key concerns emerged

Bloom Energy is a top company that provides on-site power in various industries like retail and data centers. It counts companies like Nebius, CoreWeave, Walmart, Equinix, and Honda as clients.

While Bloom has been in the industry for over 25 years, its business has come into the limelight during the data center boom. It has inked several multi-billion-dollar deals in the past few months that have helped its stock soar to a record high.

The boom has helped its revenue surge. Its recent results showed that its revenue jumped by 130% to $751 million. This revenue growth was driven by the data center industry, a trend that may continue in the foreseeable future.

Its gross margin continued rising, reaching 30%, while its operating income jumped to $72 million. Most notably, the company is expected to continue growing in the near future. 

The annual revenue is expected to jump to $3.75 billion this year, up by 85% from last year. It will then make $4.7 billion next year, up by 73% YoY. The chances are that the real figures will be higher than this, as it has done in the past few quarters.

Therefore, the stock has plunged in the past few weeks for several reasons. First, this retreat is mostly because of what is happening in the stock market, where many companies that did well during the AI boom have pulled back. This includes popular names like CoreWeave, Nebius, and SanDisk.

Second, there are concerns about the data center industry in the United States. New York has put a moratorium on new data centers, while estimates show that cancellations worth over $64 billion have been announced. These cancellations will likely impact its business in the long term.

Additionally, Wall Street is sending jitters on Oracle, which placed a large order from Bloom Energy. Oracle stock has tumbled to $124, its lowest level since April last year as concerns about its debt rose. As such, there is a risk - possibly unfounded - that Oracle may slow its data center spending over time.

Additionally, Bloom Energy is not a cheap company, with its non-GAAP forward price-to-earnings ratio being 95.60. This multiple is much higher than the energy sector median of 21. As such, the ongoing retreat could be because it is going through a valuation reset. This likely explains why the short interest has jumped to nearly 7%.

Bloom Energy stock price analysis

BE stock chart | Source: TradingView

BE stock has plunged from the year-to-date high of $350 to the current $206, its lowest level since April 20th. It has dropped below the lower side of the rising broadening wedge pattern. 

The stock has dropped below the Major S/R pivot point of the Murrey Math Lines tool at $250. On the positive side, the stock remains above the strong, pivot, reverse level of the Murrey Math Lines and the 200-day moving average.

Therefore, all hope is not lost for the stock as the earnings season gets underway. A drop below the 200-day MA will point to more downside, potentially to the ultimate support of $125.