Key Takeaways
- Fervo Energy stock fell 35% in the past month, a bit less than Bloom Energy and Oklo, as AI power stocks sold off and a short seller’s report added to the pressure.
- Fervo’s first Cape Station GeoBlock started commercial operation a day early, on Sept. 30, at the full 33 MW its power contract calls for.
- RBC and JPMorgan cut their price targets, and Morgan Stanley and Needham initiated coverage at $23 and $17, as the average target fell to $34.
- Fervo looks like a speculative buy for patient investors if its Nov. 9 report shows the rest of Phase I on track for Jan. 1 and a plan to fund Phase II.
Fervo Energy (FRVO) stock is down 35% in the past month and is now 79% below its May high. That’s a rough ride for a company whose first commercial geothermal plant came online a day ahead of schedule.
Fervo fell with the AI power trade
Fervo didn’t fall alone. Bloom Energy lost 41% over the same month and Oklo 38%, while the Nasdaq 100 fell 13%. Fervo sells carbon-free power around the clock, so it trades with the stocks riding AI’s demand for electricity. When power stocks rallied on Oct. 27, Fervo jumped with them, with no news of its own.
A short seller piled on, too. On Oct. 6, Morpheus Research published a 50-page report alleging that Fervo hid problems at its plants. Its list included heavy water loss, earthquake damage and rising costs. Fervo told Heatmap News the claims “reflect a short seller’s selective and outcome-driven characterizations of early-stage pilot data.”
My read: Bloom Energy and Oklo fell even further, so most of this drop is the AI power trade unwinding. Morpheus gave sellers one more reason.
TIKR tracks 15 analysts on Fervo Energy. How many say “Buy”?
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The plant showed up early
Cape Station’s first GeoBlock started commercial operation on Sept. 30, a day early. It hit the full 33 MW its power contract calls for. “No team has ever built a project like this anywhere in the world, and we did it ahead of schedule,” said Tim Latimer, Fervo’s CEO and co-founder. The other two Phase I GeoBlocks are due by Jan. 1, 2027. Phase II’s 400 MW is under construction for 2028, and Fervo has signed more than 1 gigawatt of binding power contracts.
Analysts expect revenue to climb from $6 million this year to $501 million in 2029:
Those estimates depend on Fervo keeping to its build schedule. Cape Station is ahead of it so far, so I see no reason for analysts to cut them. The risk is transmission. Fervo warned of a temporary curtailment on its Aug. 12 second-quarter call. Limited transmission capacity is on Morpheus’s list, too.
Wall Street reset its targets
RBC cut its target to $36 from $46 on Oct. 9. JPMorgan cut its target to $27 from $38 on Oct. 19 and took Fervo off its Analyst Focus List, though it kept its Overweight rating. Morgan Stanley initiated coverage on Oct. 29 with an Overweight rating and a $23 target. It argues that geothermal is in the early stages of its own shale revolution. Needham followed on Nov. 6 with a Buy rating and a $17 target.
The average analyst target has come down from $47 in June to $34:
That’s still nearly four times the stock’s Nov. 6 close, and even Needham’s $17 is nearly double it.
A speculative buy for patient money
Fervo reports third-quarter results before the market opens on Monday, Nov. 9. I’ll be watching three things: whether the other two Phase I GeoBlocks are still on track for Jan. 1, how the transmission curtailment is going, and how Fervo plans to pay for Phase II. Monday is also when the IPO lock-up ends on about 200 million Class A shares, which could add selling pressure. Fervo has barely any revenue yet, so it trades on the mood around AI power. I’d expect that to fade once Cape Station’s sales show up in its results.
At the end of the day, I think the selloff has gone too far for a company that just brought its first plant online early. Fervo looks like a speculative buy for patient investors, as long as Monday’s report backs up the timeline and shows how Phase II gets funded. Of course, that’s one 33 MW GeoBlock so far, and Fervo still has to do it again at a far bigger scale.
So what is Fervo Energy stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
