Bloom Energy Corp (BE.US) shares tumbled on Wednesday, falling as much as 16.5% during the session before closing down 10.6%. The decline followed Jefferies Financial Group Inc.'s downgrade of the stock from "Hold" to "Underperform" with a $31 price target, citing unclear growth prospects beyond 2026 and "early signs of excessive optimism."

The Jefferies analyst team, led by Dushyant Ailani, acknowledged that Bloom Energy Corp holds a leading position in promising market segments, but noted that many of the company's optimistic growth assumptions are facing real-world constraints. The stock's current valuation corresponds to approximately 31 times expected 2027 EBITDA, already pricing in expectations for high growth, with downside risks now outweighing the potential for further gains.

"With an unclear growth path in 2027 and beyond, a 30x valuation multiple is difficult to justify," the analysts wrote in their report. They pointed out that even using more reasonable valuation multiples, the corresponding business scale "appears extremely difficult to achieve."

The primary point of contention centers on the speed at which the company signs orders. "As management has previously indicated, closing large orders takes time. We are not underestimating Bloom Energy Corp's ability to eventually achieve business scale of over 1 gigawatt, but we don't see the possibility of this goal materializing in the short term," Jefferies stated.

The investment bank believes that aside from substantial order data, the stock's next potential catalyst will emerge on February 26, when Bloom Energy Corp will disclose its order backlog situation. However, "until then, we remain skeptical about support levels for the stock."