Bloom Energy (BE -4.90%) stock has been on a blistering run this year, up over 198% as of June 9. Investors are excited that the on-site power generation company is starting to turn revenue into profits.
Over the week, however, Bloom shares have dipped more than 13%. While seemingly not based on any company-specific news, there is a reasonable potential explanation for the pullback.
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The likely reason for the pullback
Bloom Energy reported Q1 revenue climbed more than 130% year over year to $751 million. Even more exciting was the $70.6 million in net income for the quarter compared to the $23.8 million loss from the same time a year ago. The stock price was already flying high for the year, but that first-quarter report helped send it into overdrive. On April 28, the day of the report, Bloom opened at around $228. By May 6, it was $299, a gain of more than 31%.
Shares still trade above where they were the morning of the earnings report, but they have recently pulled back. The recent stock slide appears to be more about short-term traders locking in profits than anything else.
NYSE: BE
Key Data Points
Time to buy the dip?
Based on traditional metrics, Bloom stock is overvalued, with a forward price-to-earnings (P/E) ratio of 143. As a point of comparison, Nvidia, which often has its own lofty expectations to meet, has a forward P/E of 23. Still, any stock price drop could be an opportunity for long-term investors comfortable with growth stocks, especially if it isn't related to negative, company-specific news.
Bloom's proposition of on-site power that can be deployed in as little as 90 days is resonating with companies in the artificial intelligence field, including cloud infrastructure provider Oracle. But Bloom also counts the media and telecommunications conglomerate Comcast and the home improvement retailer Home Depot as its customers. Even as shares have climbed as high as they have this year, for investors who typically hold stocks for years or decades, there's still upside potential ahead.
