Quick Bloom and Chegg Updates
Dear Subscriber,
We have had a HOLD position on Bloom Energy (BE) and Chegg (CHGG) waiting for earnings. Chegg beat as they always have--yet at 10X sales valuation and a big new competitor coming in right now Barnes & Noble our take is the 10X valuation is a high multiple that will contract with Barnes & Noble's copy cat service rolling out at 40% lower cost and the advantage of their 70+ actual bookstores at major college campuses.
SELL CHGG/TAKE PROFITS on CHGG. Or use a HARD sell stop 10% under the close today and raise the stop (if you are an active trader).
Bloom, however, is SO undervalued at less than .51X annual 2020 revenues and its 54% CAGR (32% estimated in 2020) that it again is a Cloudera example--private equity is drooling over Bloom at this point.
The short-selling has been incredible--over 60% of the trades before this last Monday was SHORT SALES--where sellers borrowed Bloom shares and sold them. THAT action beat down BE down to the $2.50 range--and then the panic buying hit to cover those shorts. BE was being priced as if it is going out of business--that is NOT going to happen for many reasons. #1 is the HUGE Venture Capital funds that are backers--starting with Kleiner Perkins. #2 We have no inside information here--but just like Cloudera--if a financial sponsor comes in and
1) Shakes out the shorts with a $6-7 bid
2) Refinances outstanding debt
3) GETS BE Sales team knocking on EVERY Fortune 2000 company with meaningful exposure to North and Southern California office space/retail space/operations/distribution facilities and every healthcare/education/public service organization with 50+ employees
They are THE emergency power (and normal power for that matter) choice. ALSO--we now assume that California will extend the clean energy tax credits to 2025 at least as business and government HAVE TO make facilities "fireproof", earthquake-proof and PGE proof.
Over the last 1 year, BE has beaten EPS estimates 75% of the time and has beaten revenue estimates 100% of the time. Q3 and Q4 are their strongest months for "accepted" installations meaning equipment installed and working. And at $5k per kilowatt per Bloom Server, EVERY organization in Fire/PGE country can afford a Bloom Energy server not only as a back-up but as a PRIMARY electrical power source (given the higher PGE and So Cal Edison power bills that are 100% guaranteed to be coming soon).
We do expect to see a LOT MORE institutional and corporate installations like this one at Fordham
Fordham University Takes Innovative Step in Sustainability with Bloom Energy
9:00 AM ET, 09/26/2019 - Business Wire
NEW YORK & SAN JOSE, Calif.--(BUSINESS WIRE)--Sep. 26, 2019-- This week, as New York City recognizes NYC Climate Week 2019, Fordham University and Bloom Energy announced a clean energy server installation for the William D. Walsh Family Library at Fordham University.
The 250-kilowatt installation will generate clean electricity on-site and provide that power directly to the five story, 240,000 square foot library.
The solid oxide fuel cell technology produces electricity without combustion using a highly efficient, electrochemical process, resulting in electricity that is cleaner than the local utility grid. By using the Servers, Fordham University will offset more than 300 metric tons of CO2 each year – the equivalent of leaving 328,000 pounds of coal in the ground, unburnt.
Emissions reductions and air quality improvements are especially important for a metropolitan-based university and the New York City area, which is ranked in the top 10 for high ozone days and top 30 for annual particle pollution among metropolitan areas, according to the American Lung Association. A recent study in JAMA found that if you live in a city with high ozone levels for a decade, the results are similar to smoking a pack of cigarettes every day for 30 years. Bloom Energy Servers generate virtually none of the smog-forming pollutants and particulate emissions that cause air pollution, asthma, and lung disease.
The Servers use almost no water as compared to power plants supplying the U.S. grid that withdraws 150 million more gallons of water per megawatt of electricity each year. With their use, Fordham will conserve 39 million gallons of water annually, aligned with New York City’s Water Challenge to Universities calling for a 5 percent reduction in water use.
Fordham University has taken a leadership role in sustainability with its Green Campus Initiatives. The campus is actively working to meet New York City’s Carbon Challenge to reduce its carbon footprint by 40 percent by 2030. And, the University has already been identified as a 2019 Leader in the ‘Reforming the Energy Vision Campus Challenge,’ a New York State Clean Energy Initiative.
The Servers will be located next to and supply clean electricity to Fordham’s Walsh Library. The library, first opened in 1997, is the largest of the University’s three libraries and host to more than one million volumes. It is located on the 179-year-old Rose Hill campus, the original campus of Fordham University, which is home to several historic buildings and next to the New York Botanical Gardens and the Bronx Zoo.
“We are deeply aware of the fact that responsible stewardship of the Earth is a charge from God our creator, who has entrusted it to our care,” said Joseph M. McShane, S.J., president of Fordham. “Therefore, we are aware that we must bring to the present challenge all the wisdom and commitment that we can muster. The new servers are an important part of our strategy to make a meaningful reduction in our carbon footprint.”
“Fordham University is ahead of the curve in sustainable campus practices and green campus initiatives,” added Bill Bockoven, vice president of the Eastern Region at Bloom Energy. “By adopting innovative technology to achieve green campus goals, Fordham illustrates its foresight and investment in protecting the campus and local environment and leadership in the midst of today’s climate realities.”
In addition to sustainability benefits, Fordham University will see cost savings in deploying Bloom Energy Servers. There are no upfront capital costs and the University will experience lower and more predictable energy expenses. The groundbreaking for the installation is scheduled for this fall"
So LETS HANG TIGHT. FYI I am selling some $4 Nov 15 calls at 70 cents as a hedge on a position I instigated during the short-selling tornado--I know based on emails and messages some of you all have as well.
IF BE spikes to $6 or more on a massive short squeeze---SELL your position, take the losses and use them against 2019 profits (like CHGG) and let the stock settle out.
A conference call to discuss third-quarter results will follow at 2:00 pm (PT); 5:00 pm (ET) on Thursday, November 7, 2019. To listen to the conference call, dial +1 (844) 828-0524 and enter the passcode: 3989647. International callers should dial +1 (647) 689-5146 and enter the same passcode: 3989647.
A simultaneous live webcast will be available via the Investor Relations section of the Company’s website at https://investor.bloomenergy.com/. An archived version of the webcast will be available on the Bloom Energy investor website for one year at https://investor.bloomenergy.com/.
A telephonic replay of the conference call will be available until Thursday, November 14, 2019, by dialing (800) 585-8367 or (416) 621-4642 and entering passcode 3989647.
Here's to Bloom hopefully KILLING the shorts!