The short report shaking Bloom Energy - is the business model distorted and growth capabilities limited? ๐ฉธ $BE
Short seller Hunterbrook Capital published a comprehensive investigative report titled "Bloom's Big Lie" in which it raises a series of claims regarding Bloom Energy's supply chain, raw materials, and growth targets. ๐ฅ
Although it's important to know - Hunterbrook holds a short position on the stock, therefore it has a business interest in the decline of $BE's stock price - but on the other hand, the report presents detailed claims based, according to the company, on international trade data, company documents, and field research. ๐ก
1๏ธโฃThe report's main claim is that Bloom is not independent of China as it previously stated.
Over the past year and a half, the company's CEO, K.R. Sridhar, stated multiple times that Bloom does not have a supply chain from China, and that it is not dependent on China for scandium supply. ๐จ๐ณ
However, according to Hunterbrook, four different supply routes were found linking Bloom Energy to scandium originating from China. ๐ค
Additionally, according to the researchers, a representative of Hunan Oriental Scandium even confirmed that the company is one of Bloom Energy's main scandium suppliers - note the correspondence we attached between them. ๐ฌ
2๏ธโฃThe second, and perhaps most important, issue is scandium itself:
Scandium is one of the critical raw materials in Bloom's fuel cells, and according to the report - this is where the company's biggest bottleneck lies. โ ๏ธ
Bloom set a target to reach a production rate of approximately 5GW per year, but according to Hunterbrook's calculations, to meet this target the company would require approximately 220 tons of scandium oxide annually,
For comparison - the expected global supply is estimated at only about 240 tons... ๐ฉ
If this estimate is correct - it means Bloom would need almost all of the world's scandium production to meet its growth targets - a scenario the researchers describe as commercially inconceivable. ๐ฉ
3๏ธโฃThe report also casts doubt on one of the most important figures for investors, the order backlog:
Bloom Energy presents an order backlog of approximately $20 billion, but according to Hunterbrook, only a small portion of it is based on real, binding contractual commitments. ๐ฉ
According to them: only about $492 million in binding commitments can be identified in the financial reports - and therefore the market may be attributing too much weight to the order backlog. ๐ค
Since Bloom Energy has become one of the main beneficiaries of the wave of investments in data centers and artificial intelligence in recent years -
The report raises a more serious question:
If scandium availability is indeed limited as the researchers claim - it is possible that the company's future growth rate will be significantly lower than the forecasts some investors currently rely on... ๐ฉธ
Bloom Energy has already responded to the report, stating that it is reviewing the claims and will set the record straight. ๐ค
Additionally, the company emphasized that:
โ Its supply chain is diversified across several countries. ๐
โ For over 20 years, it has built a diverse supplier network. ๐ฌ
โ The company holds proprietary technology for recycling and material recovery. ๐ฑ
โ The amount of scandium in each fuel cell is very small, and according to them, it is an amount similar to "a pinch of salt on dinner," therefore, they claim the fear of material shortage is exaggerated. ๐
The most important point for investors is that these are currently claims by a short seller with a clear business interest in the stock crashing - the report raises three fundamental questions that the market will continue to follow:
โ๏ธ Is Bloom truly independent of a Chinese supply chain? ๐จ๐ณ
โ๏ธ Is there enough scandium to allow the company to meet its ambitious production targets? ๐ญ
โ๏ธ Is the company's order backlog, estimated at $20 billion, based on solid commercial commitments - or is a significant portion of it just talk? โณ
Bloom's full response - along with data it will present in the coming weeks - may be the key factor determining whether this short report becomes temporary noise - or a significant turning point for the company and the stock. ๐ฉธ
On our premium channel today, we delve into the fine details of the short report and analyze why analysts are not excited about it... ๐ก
If you haven't joined yet - now is your time to join us. ๐ต