BE Stock: Why The Price Surged

By Amit Chowdhry ● Oct 26, 2021
  • The stock price of Bloom Energy Corp (NYSE: BE) increased by 37.15% yesterday. This is why it happened.

The stock price of Bloom Energy Corp (NYSE: BE) increased by 37.15% yesterday. Investors are responding positively to Bloom Energy and SK ecoplant, an affiliate of South Korean conglomerate SK Group announcing they are expanding their existing partnership to fortify their market leadership in power generation and to establish market leadership in the hydrogen economy. This partnership includes purchasing a minimum of 500 megawatts (MW) from Bloom Energy, representing a $4.5 billion revenue commitment; co-creating two hydrogen innovation centers; and targeting an equity investment of approximately $500 million.

Since the start of their strategic partnership 3 years ago, Bloom Energy and SK ecoplant have transacted nearly 200 MW of projects together totaling more than $1.8 billion of equipment and expected service revenue. And over the next 3 years, the companies will expand this existing business with contracts for at least an additional 500 MW of power between 2022 and 2025, representing approximately $4.5 billion in equipment and future service revenue.

Bloom Energy and SK ecoplant had agreed to create Hydrogen Innovation Centers in the United States and South Korea. And the intent is to significantly accelerate the global market expansion for Bloom Energy’s hydrogen fuel cell and hydrogen electrolyzer products. This agreement also reflects both Bloom Energy and SK ecoplant’s enhanced commitment to a zero-carbon future and the further implementation of environmental, social, and governance practices.

Bloom Energy and SK ecoplant also agreed to strengthen their strategic alliance through expanding business cooperation in global markets, which may include exclusive distribution rights in select new markets.

SK ecoplant is going to invest $255 million in Bloom Energy by acquiring 10 million shares of zero coupon, non-voting redeemable convertible preferred stock at a price of $25.50 per share. And SK ecoplant has the option to acquire a minimum of an additional 11 million shares of Class A common stock at a 15% premium to the prevailing stock price at the time, which must be no later than November 30, 2023, and is subject to maximum ownership of 15%.

Upon completion of SK ecoplant’s purchase of its second tranche, SK ecoplant is going to add a member to the Bloom Energy Board of Directors. SK will give an irrevocable proxy to vote its shares to Bloom Energy.

Bloom Energy plans to use the proceeds for market growth, rapid commercialization of hydrogen solutions, and for general corporate purposes.

KEY QUOTES:

“Bloom Energy is SK ecoplant’s largest strategic partner in clean energy. We have seen the unparalleled performance of Bloom Energy’s product over the past three years and the company’s ability to execute and deliver a superior solution. We have also had firsthand experience with Bloom’s new hydrogen fuel cells and highly efficient electrolyzers, and we are excited about the competitive advantage we will have. Our work together has established a shared commitment to sustainability, innovation, and creating value. We are demonstrating our confidence and furthering our commitment to this partnership by making this financial investment.”

— Kyung-II Park, CEO, SK ecoplant

“From the start of our relationship with SK ecoplant, we have recognized that working together will accelerate our growth and enable SK to become a leader in clean energy and infrastructure solutions. I am thrilled that over the past three years the superior performance of our products, execution capability, and the scale of our operations have led to such a strong relationship with SK ecoplant. SK ecoplant’s confidence to invest in us is a clear validation of our products and our people. Together, we can accelerate the hydrogen economy on a global basis. This is a win, win, win, win for our company, partners, customers, and investors.”

— KR Sridhar, founder, chairman, and CEO, Bloom Energy

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.