$STPK is an energy storage company focusing on battery storage systems, network integration, and battery optimization. They brand themselves as “the first pure play smart energy storage company to go public”.
First, let’s take a moment to quickly understand how battery storage works. Battery storage is a type of energy storage power station that uses a group of batteries to store electrical energy. This is primarily used in the renewables space with solar and wind energy. In recent years battery storage (and in part renewable energy) hasn’t seen the exponential growth that many are expecting due to limitations in battery technology and high development costs.
This being said, recent developments of battery tech and reduction of costs has now made battery storage much more feasible at the commercial / industrial level. Battery storage still has ways to go in the residential space due to risks that come with it.
While battery storage has improved, it will not be stand alone solution for many years to come because it simply isn’t feasible with our global energy infrastructure. Battery storage will work with our interconnected grid to reduce imbalances between energy demand and energy production.
Ok, so now that we know how it works, what does the market look like?
- All major global markets are forecasted to double over the next decade
- Over the next decade, the US market is expected to grow at ~45% CAGR and the global market is expected to grow 31% CAGR
- Future tailwinds with improvements in the regulatory environment
Great, so how is $STPK revolutionizing this space? They are doing so by providing a “one stop shop” solution for utility companies. Stem’s solution can provide integrations with hardware (batteries) and the grid (network), while also using an AI powered software solution to optimize their energy storage.
Their solution could possibly replace other pure play companies in the value chain which is key. Interesting, so let’s move on to their AI software called Athena. Athena is an operating system for energy distribution and storage systems, collecting big data that enables customers to alternate between onsite generation, grid power or battery power
Athena is a HUGE part of their value proposition and truly could be revolutionary. Now, let’s move onto their financials. First, it’s important to understand they have a hardware and software business
- Increased rev from $17 mil to $33 mil YoY, expected to increase to $147 mil in 2021
- 81% CAGR from 2020-2026
- Gross margins have hovered around 12-18% since 2018 but expected to increase to 40%+ by 2026
- 90% of forecasted 2021 revs are from closed executed contracts (not pipeline!) -> underpromising and overdelivering
- Software revenue expected to account for 30% of total revenues by 2026
- $14 mil in 2020 -> $240 mil by 2026
I was thinking how $STPK is compared to $TSLA because many people think they are competitors. Interestingly enough, they actually use batteries from $TSLA, Samsung, and Panasonic. Additionally, they have a partnership with $TSLA!
This is an extremely attractive play in the renewables space as it is one of the pick and shovel plays in the space.
TLDR: Stem is a leading player in the energy storage market as they have solutions to address all major aspects of the value chain. More specifically:
- Large TAM + strong macro tailwinds
- ~$1.2 trillion in new revenue opportunities for integrated storage expected to be deployed by 2050(1)
- Battery storage capacity expected to increase by 25x by 2030
- Market leader with best in class technology
- 900+ systems operating or contracted with Stem’s Athena software
- 75% market share in CA BTM storage market, largest in the US
- First mover AI platform that operates with 40+ utilities, 5 grid operators and over 16MM runtime hours
- Highly visible growth
- Recurring revenue streams provide strong financial position to accelerate growth
- Revenues projected to grow at ~51% CAGR from 2021 to 2026
Hope y’all enjoy! Long $STPK