STEM Dips 43% in Six Months: Should You Buy, Sell or Hold the Stock?

Financial Performance - Revenues plunged by 78% in Q3 2024 and 70% over the first nine months of 2024 compared to the previous year [1] - Full-year 2024 revenue forecast lowered to $135-$155 million from $200-$270 million [4] - Zacks Consensus Estimate for 2024 revenues is $136.9 million, indicating a year-over-year decline of 70.3% [4] - Bookings forecasted to be between $100 million and $500 million, down from $600 million to $1.1 billion [6] Business Strategy and Transition - Significant decline in hardware sales due to weak demand, financing delays, and project-related interconnections [9] - Shift toward shorter software and service contracts, now typically ranging from three to five years [5] - Reduction in battery resales, changes in production and marketing, and realignment of business processes [18] - New business plan focuses on developing and marketing AI-enabled software and services [19] Industry and Market Position - Shares of GDYN, VRT, and DXC gained 119.3%, 32.8%, and 8.5% respectively over the past six months [10] - Stem's shares declined by 42.8% in six months, underperforming the Zacks Computer and Technology sector and Computers - IT Services industry [15] Innovations and Projects - Successful completion of a solar and storage co-location project with Arizona Electric Power Cooperative and Prometheus Power [3] - Deployment of Stem's AI-powered clean energy software, Athena, for ongoing operation and monitoring of the storage system [3] - Mercuria Energy Trading standardized on Stem's PowerBidder Pro for a second clean energy asset in Texas [16] - Launch of the PowerTrack Asset Performance Management suite for managing storage, solar, and hybrid energy assets [22] Challenges and Outlook - Unpredictability in timelines for utility-scale storage hardware projects [12] - Macroeconomic challenges such as prolonged inflation, potential import tariffs, and geopolitical issues [21] - STEM asserts its edge device and AI-enabled software are uniquely positioned to drive growth in renewable energy [13]