This is also likely to make batteries and grid management more important is the “electrification of transportation,” which in all probability will make electricity even more important and meaningfully more expensive over the longer term. Spurred by increased pressure to become “green,” many more companies and governments will increase their utilization of renewable energy. ![]() Moreover, the company correctly points out that the hugely increased popularity of renewable energy has made managing electricity flow much more 0complex for large businesses, while greatly increasing the difficulty of running grids for utilities. InvestorPlace - Stock Market News, Stock Advice & Trading Tipsħ Overvalued Stocks Investors Just Don’t Get Tired OfĪdditionally, the combination of renewable energy systems and batteries rapidly proliferating, Stem appears to be well-positioned to exploit that trend. Using artificial intelligence (AI), Stem says it provides enterprises with “integrated battery storage systems, network integration and battery optimization.” However, production can be a major issue, mainly because Stem depends on various suppliers and could be affected by disruptions, outages and other aspects.Battery concept powering electric vehicle.Īs my headline indicates, however, I do think that Stem faces significant risks, including potentially strong competition. As far as adoption rates are concerned, market analysts are certain of the massive potential of the smart energy storage industry. Some of these factors include growth in its sales volume, ability to procure ESS equipment cost-effectiveness, and attracting new customers for its high margin offerings.įurthermore, a lot of its success will depend upon the adoption of renewable energy and the cost reductions in battery storage. ![]() It has a tall order ahead of it is turning a profit which is contingent on several factors. Stem expects to continue incurring losses through 2022. Looking Forward for Star Peak Energy Transition Its net loss continues to grow at a massive rate which will continue to widen its bear case. With Athena being a recurring SaaS model, it has a strong gross margin profile that will ease its path to profitability.ĭespite the rampant growth in revenues, the company has proven to be ineffective in managing its costs. The platform is effectively used for demand and supply forecasting and battery optimization. Moreover, analysts forecast that its revenues could increase at an incredible 96% to $944 million by fiscal 2025.Ī core element of Stem’s future potential depends on its AI-driven energy solution, named Athena. It re-affirmed its guidance in its earnings report in March. The company had guided that it expects revenues to be four times greater in 2021 than in 2020. The company has admitted that profitability appears to be way off at this time. Operational expenses have shot up roughly 26.8%. There was a 57.4% increase in its accumulated deficit to roughly $408 million. However, the fourfold increase in revenues was unable to lead the company to profitability. ![]() Revenues increased by a whopping 69.6% to $36.3 million. Stem recently released its financial results for 2020, ahead of its merger with Star Peak Energy Transition. However, a few question marks, especially regarding its path to profitability, limit its attractiveness. The euphoria around the merger led to a 167% growth in SPTK stock in the past six months. ![]() Therefore, it has a massive addressable market which could result in a premium value for the stock. 8 Hot, A-Rated Small-Cap Stocks to Buy Now
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