![]() ![]() After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.MILLBRAE, Calif., J(GLOBE NEWSWIRE) - Sheraton Waikiki has selected Stem, Inc. When our award-winning analyst team has a stock tip, it can pay to listen. If it can capitalize on its leadership position with strong AI as the energy space expands, Stem could reward patient and risk-tolerant shareholders immensely in 10 years. However, this company is for investors with a long-term time horizon, a diversified portfolio, and a large risk appetite. Its ability to optimize efficiency could make both the world and your portfolio much better in a decade, which is why I like the stock today. With so much growth expected in the green energy space in the coming decades, Stem certainly has the potential to be an amazing investment, but investors have yet to see its consistent execution as a public company. This is a "swing for the fences" stock, but one that - if successful - could be incredibly lucrative. With Stem's lack of financial stability and optimistic outlook, it's not for the faint of heart or investors looking for a reliable and steady investment. However, the concern lies in the company's ability to actually hit that figure. If it hits this estimate, that would mean shares are trading at 11 times sales, which is not a terrible valuation. The company projects full-year 2021 revenue of $147 million, implying $72.5 million in revenue in Q4, which is almost as much as the company made in the first nine months of the year. Stem has some optimistic views on its growth opportunity. Stem has $576 million in cash and short-term investments to fuel its cash burn, but this can't go on forever. In the first nine months of 2021, the company also lost $74 million in free cash flow. The company reported just 8% gross margin in Q3, and while that did improve from negative 15% in the year-ago quarter, that is concerning considering its software has 80% gross margin. Revenue has been growing at a rapid pace - in the third quarter of 2021, its revenue grew 334% year over year to $40 million - but its gross margin and profitability are very poor. The company does have a few flaws that could cause it to miss out on this massive opportunity. Additionally, Stem estimates that its addressable market will become 25 times larger by 2050, worth $1.2 trillion by then. The global energy storage market is expected to grow 35 times larger by 2030 at a 35% compound annual rate. Green energy is expected to be massive over the coming decades. it could be easier for Stem to integrate its AI into its systems than a start-up without this leading edge. With such a dominant position - Stem controls 75% of the storage market in California and it's the largest company in the space in the U.S. That's more than Tesla, a competitor on the storage side but a partner with Stem on the AI side. It has over 950 storage systems across the U.S. It's a dominant player in the energy storage space, with big-name companies like Amazon and Walmart as customers. Stem had just $74.5 million in revenue in the first nine months of 2021, but it has gained bountiful experience since its founding in 2009. In other words, the company is making renewable energy more practical by tearing down the barriers and past problems of green energy. It then brings all this data together and compares it with prices to make its customers' energy consumption the most cost-effective by automating the expenditure of energy. The company pulls data on weather, energy usage, real-time energy prices, and even the time of day to optimize use. ![]() Stem's use of artificial intelligence (AI) is what excites me most. Storing energy for later use is critical in making renewable energy mainstream, and Stem is helping achieve this with a market-leading energy storage system that helps companies manage their renewable energy usage. After all, the sun doesn't always shine and the wind doesn't always blow. The cost of renewable energy sources like solar and wind has been coming down dramatically, but managing energy in these areas can be difficult. ![]()
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