Athena is sold through a recurring SaaS model with a 100% attach rate secured by 10-20 year contracts.
#STEM STPK STOCK SOFTWARE#
The importance of Athena to Stem's future value proposition cannot be overstated, the company wants the market to value it as a higher margin ESG software play on a growing industry. Revenue for its 2020 fiscal year is estimated at $33 million, this is then forecasted to grow at a 96% 5-year CAGR to $944 million in fiscal 2025.Ī significant part of Stem's bull thesis is the potential of its AI-driven software solution, named Athena, for energy supply and demand forecasting and battery optimization. The company is estimating material growth in the years ahead. This was 51.5% of total commercial installations in the state.Ĭommercial Energy Storage Installers in California in 2019 ( Source) The company has a dominant position in California, the largest energy market in the United States, with 106 sites totaling 26,991 kW in 2019. Stem is a supplier of smart energy battery storage for a number of commercial customers including utilities. This energy is then released in the evening when supply has waned and is now less than demand. An example scenario would be the storage of excess energy during the afternoon if low clouds and ample sunshine drives energy production to be in excess of demand. This intermittent nature of energy supply from both solar and wind requires energy storage to smooth out the peaks and troughs. The conditions for maximum energy production from photovoltaic panels and wind turbines cannot remain constant. The proliferation of solar and wind energy farms creates a unique problem as their intermittent availability means that any electricity produced is subjected to significant alternations throughout the day. This would provide the runway for strong revenue growth far into the future and could potentially act as a catalyst for further share price growth. Bulls would also point to the stated $1.2 trillion market opportunity the company is addressing. In an age where valuation multiples have taken a backseat in high growth sectors, this premium is not too significant especially as the company is expecting revenue to grow by more than 114% to $315 million in 2022.
With Stem estimating fiscal 2021 revenue to come in at $147 million, this would place the company's forward 1-year revenue multiple at 32x. Is Stem truly as revolutionary as its bulls claim? Is the hype warranted? Further, while Stem's SPAC deal was completed at an implied equity value of $1.35 billion, its market capitalization has now risen to $4.74 billion with 135.4 million shares expected to be outstanding and its common shares currently trading at $35 per share. This level of hype and borderline euphoria around a stock always creates a level of skepticism. There has been a material level of hype around Stem from retail investors as well as established outlets like CNBC who listed the company on its " 10 SPACs To Die For" and Citron Research who called the stock the " most compelling market ESG story" with a $100 price target. The SPAC transaction will see Stem become a public company 12 years after it was founded. in a transaction that will see the smart energy storage firm raise $608 million of gross proceeds, including a $225 million PIPE. The firm is going public with a merger with blank check company Star Peak Energy Transition Corp. Stem Inc (NYSE: STPK) describes itself as a market leader in AI-driven clean energy storage systems.
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