Bloom Energy (NYSE:BE) is down more than 5% on Wednesday, just ahead of the company’s earnings report scheduled for Aug. 3. At today’s low, BE stock was down by more than 8%. The action comes just a day after the stock fell 1% on Tuesday, too.
In fact, Bloom Energy stock has been struggling a bit. Investors are hoping the stock can avoid its third-straight weekly decline. At today’s low, the stock was down more than 13.5% from its mid-July high.
On the flip side, though, earnings in early May helped propel a massive rally in the stock price. At the time, investors overlooked a slight earnings miss in favor of a revenue beat, as sales grew more than 36% year-over-year (YOY). Guidance came in strong as well. Ultimately, BE stock rallied more than 50% and climbed in eight out of nine weeks after the report.
So, it’s not like the stock has performed all that bad when considering its price action over the past few months. However, the pre-earnings move this week is concerning to the bulls — and understandably so.
What to Expect of BE Stock Going Forward
Earnings are going to be the dominant discussion for BE stock in the short term. While a pre-earnings decline of this magnitude could be a warning sign of things to come, it also helps de-risk the stock a bit. In other words, by declining now, it may set up investors to have lower expectations going into the event.
While earnings will be the focus, the quarterly report is not the focus at the moment. Yesterday, the company launched a new solution for net zero heating and cooling. According to the company, it is “now offering the Bloom Energy Server […] as a Combined Heat and Power (CHP) solution that utilizes a high temperature (>350°C) exhaust stream for industrial steam production and absorption chilling.”
Further, the solution “enables industrial and commercial customers to save on energy costs and reduce carbon footprint.” The product is ready to be shipped now and already has its first customer, German company Geothermie-Gesellschaft Bruchsal GmbH.
The company also noted the following:
“Customers can use the Bloom Energy Server now not only to produce high-efficiency clean electricity, but also high temperature steam with no additional fuel input—significantly reducing operating costs and carbon emissions. The Bloom technology offers a pathway to decarbonization for industries from chemicals to petroleum and refining, pulp and paper, food processing and primary metals that does not exist in older CHP systems.”
Broader Decline Weighs on Bloom Energy
Is that news why the stock is down today? No. Instead, it has more to do with the decline in energy stocks.
More broadly, the Energy Select Sector SPDR Fund (NYSEARCA:XLE) is down more than 1% today. Meanwhile, the Invesco Solar ETF (NYSEARCA:TAN) is performing even worse, down more than 5%. The broader pressures in the U.S. stock market and these industries specifically are having an outside impact on BE stock.
Lastly, it’s worth noting that Zacks analysts are optimistic about Bloom. They recently named the company as one of three stocks that are “likely to have beat on estimates in the ongoing reporting cycle.” Luckily, investors won’t have to wait long to find out, with the company reporting after the close on Thursday.
On the date of publication, Bret Kenwell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.