On Oct. 30, FuelCell Energy (NASDAQ:FCEL) closed at an even $2. Exactly one month later, FCEL stock closed at $10.20.

Even with a pullback of late, FCEL stock still has more than quadrupled in less than six weeks. Given that rally, it’s fair to ask: what’s changed?

The answer, as far as FuelCell Energy itself goes is: not much. There’s one piece of company-specific news that looks bullish, and clearly investors see the external environment as more positive.

But those two factors hardly seem like enough to send the stock up much at all, let alone more than 300% as of this writing.

It’s possible investors simply missed the story until recently. But the more likely answer is that FCEL stock is part of a bubble in “clean energy” stocks. And while some of those names still could be long-term winners, I’m skeptical FuelCell Energy will be one of them.

A Closer Look at FCEL Stock

Since the end of October, there have been two real pieces of news for FuelCell Energy — one positive and one negative.

The bad news first: results for the fiscal fourth quarter (ending October) look disappointing. FuelCell Energy disclosed that revenue for Q4 should come in between $16.0 million and $17.5 million.

To be fair, at the midpoint that range suggests 52% growth year-over-year. But the guidance was below Wall Street expectations, and the year-prior quarter was weak. Indeed, the entire guidance range sits below Q4 FY2018 revenue of $17.9 million.

Just as concerning is that fact that quarter-over-quarter top-line performance is negative, with FuelCell Energy also expecting a larger loss on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis versus Q3.

A single quarter doesn’t break the bull case for FCEL stock, admittedly. But this quarter, at least based on guidance (released after the end of the quarter), simply does not and cannot support the monster rally we’ve seen so far.

That said, the good news is that FuelCell Energy has taken full advantage of the rally in its stock. It sold 25 million shares in a public offering last week which raised net proceeds of over $150 million. That follows an infusion of nearly $100 million in early October.

Given current losses and the growth plans, FuelCell Energy needs that capital. Debt was no longer an option, either. The company closed the fiscal third quarter with total debt of over $180 million. It was only seventeen months ago that the company itself was warning of bankruptcy.

The “Green Energy” Bubble

It’s probably in the eye of the beholder which of those pieces of news is more important. Certainly, the raised capital is helpful, although it also represents substantial dilution of existing shareholders.

But all the capital in the world won’t drive FCEL stock higher unless the company starts driving consistent growth and some level of profitability. Q4 guidance suggests that performance remains some ways off.

Of course, there has been a notable change in the external environment of late. “Green energy” stocks have gone bonkers. Since Oct. 30, FCEL has rallied 339%. Fellow hydrogen plays Plug Power (NASDAQ:PLUG) and Bloom Energy (NYSE:BE) have more than doubled.

Over in the electric vehicle space, smaller names like Blink Charging (NASDAQ:BLNK) and Switchback Energy Acquisition (NYSE:SBE) have tripled or come close. Larger ‘green’ stocks have rallied as well.

There seems to be a catalyst here, in the election of Joe Biden to the U.S. Presidency. But, truthfully, that seems like an awful thin reed for any rally, let alone one of this size.

After all, a Biden Presidency wasn’t really a surprise. Polls got 2016 wrong, yes, and overestimated Democratic strength in 2020. But even betting markets had Biden as a 2-to-1 favorite heading into Election Day.

They also suggested a solid chance of a Democratic majority in the Senate, which presumably would be enough to allow for a more aggressive environmental policy. That won’t happen. Vice President Kamala Harris could be the tiebreaking vote if Democratic candidates win both Georgia run-offs, but a single defection could scuttle any Democratic plans.

In other words, hopes for a “New Green Deal” seem not just unlikely, but less likely than they did six weeks ago.

FCEL Stock Roars

So what’s driven the parabolic rally in FCEL stock? From here, it looks like a good old-fashioned bubble. Investors are buying ‘green’ stocks based on supposed catalyst that wasn’t a surprise and isn’t even really a catalyst.

And they’re buying every ‘green’ stock — regardless of quality. It’s hard to argue that FCEL is a quality name. This isn’t a company losing money or posting minimal revenue (roughly $70 million this fiscal year) because it’s a young company. FuelCell Energy was founded in 1969. It went public in 1992.

Rather, this company is small and unprofitable because it’s never figured out a way to be anything but. I’m not sure why that’s supposed to change. Both Bloom and now Plug Power are in the same end markets. Each of those rivals is a better company with larger revenue and stronger execution.

In a bubble, investors tend to buy any stock, and often focus on the riskiest names because they’re the “cheapest” or have fallen the furthest, and therefore supposedly have the most room to rally. That’s a good an explanation for this rally in FCEL stock as any; in fact, it might be the only explanation.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.