Where Will Bloom Energy Be in 1 Year?

Bloom Energy (NYSE: BE) is a clean energy company that makes fuel cells. With the increasing demand for lower carbon-intensive power, the company appears well-positioned to take advantage of global trends in the clean energy space. Bloom Energy's fourth quarter was strong.

Yet, 2025 could be a particularly good year for the company. Here's why and what it actually means for investors.

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What does Bloom Energy do?

Bloom Energy makes two products, the Bloom Energy Server and the Bloom Electrolyzer. The vast majority of its sales have been of energy servers, which produce electricity. The electrolyzer is a newer product that produces hydrogen. The company's products aren't really meant to replace the power grid, but to supplement it with reliable backup power. That said, Bloom Energy can "be onsite and operating in months," which is far faster than what a utility can usually offer with a grid connection.

Image source: Getty Images.

The speed of delivery here is important. First, it means that companies can turn to Bloom Energy to bridge the gap between when a project is built and when it can be connected to the grid. However, there's another key factor here that investors need to keep in mind. As CFO Dan Berenbaum noted in the company's third-quarter 2024 earnings release, "Bloom is a project-based business, which can lead to quarterly variability." In other words, Bloom Energy's business is lumpy.

Although that's not inherently a bad thing, it does change the way investors should think about Bloom Energy's financial results. For example, in the third quarter of 2024 the company generated roughly $330 million of revenue, down from around $400 million in the same quarter of 2023. To make matters worse, the third-quarter 2023 result was lower than the second quarter's, when it generated nearly $336 million in revenue.

Here's the interesting thing: Bloom Energy's full-year projections at the time suggested that fourth-quarter revenues would come in between roughly $500 million and $700 million. When the company finally reported fourth-quarter results, sales came in at $572 million.

Clearly, the quarterly trends aren't exactly helpful when you are looking at Bloom Energy's business. It is worth noting that the company is losing money as it continues to develop and market its technology. So this probably isn't the kind of stock a risk-averse investor would want to buy, regardless of the top-line volatility on the income statement.

But this variability is likely to be important to understand in 2025.

Bloom Energy has a big deal

As 2024 drew to a close, Bloom Energy announced that it had inked a deal with partner SK Eternix to supply an 80-megawatt development in South Korea. Spread across two "ecoparks," this is, according to Bloom Energy, the "world's largest fuel cell installation in history." That's great news and shows that the company's products are gaining traction with customers.

However, the really important fact for investors in Bloom Energy could be this line from the news release: "The project is expected to begin commercial operations in 2025." This suggests that Bloom Energy could have a strong revenue year in 2025 as it supplies this project with fuel cells. Its full-year 2025 projection is for revenue of $1.65 billion to $1.85 billion, up from roughly $1.47 billion in 2024.

BE Revenue (Quarterly) data by YCharts

That is all good news. But it is also bad news because of the project-based nature of the business. If investors get overly excited about the company's near-term prospects, the stock price could end up rising sharply only to risk a steep pullback if new projects aren't found to replace the projects (including the largest fuel cell installation in history) that get supplied in 2025. It seems likely that 2025 will be a strong year for Bloom Energy and its stock, but that could be setting investors up for a fall.

Bloom Energy is a long-term play

The revenue chart above highlights the variability Bloom Energy experiences on its top line. That isn't likely to change in 2025 with the company already explaining that it has material project demand to fill during the year. However, there's another trend to notice in the revenue chart, which is the general rise in revenue over time.

This suggests that Bloom Energy's power cells are catching on, which could eventually lead it to turn sustainably profitable. You just have to be able to see past the quarterly volatility that is inherent in the business if you want to make an educated choice about whether to buy (and perhaps when to buy) this stock.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.