SAN FRANCISCO - Stem, Inc. (NYSE: STEM), a provider of clean energy solutions, has been notified by the New York Stock Exchange (NYSE) of a potential delisting risk after its stock price averaged below the required $1.00 over a recent 30-day period. The company acknowledged the notice, received on August 28, 2024, and is preparing a plan to address the deficiency within the stipulated six-month cure period.
According to NYSE rules, Stem can return to compliance if its stock closes at $1.00 or higher on the last trading day of any month during the cure period, and if the 30-day average closing price leading up to that day is also at least $1.00. If Stem fails to meet these conditions or to comply with other listing standards, it could be subject to delisting.
Stem's business operations and SEC reporting obligations remain unaffected by the NYSE's notice, and the company has stated that this development does not trigger a default under any of its major debt or other agreements.
The company specializes in AI-driven software for energy management and has a portfolio that includes solutions for asset management and optimization, connecting stakeholders in the clean energy space. Its Athena platform is central to its offerings, alongside integrated partner solutions for storage, solar, and electric vehicle (EV) fleet charging.
The notice from the NYSE does not reflect on the company's operational performance or its strategic initiatives. Stem continues to focus on executing its business model and maintaining its commitments to customers and partners.
This situation highlights the volatile nature of the clean energy market and the challenges companies face in maintaining regulatory compliance. Investors and stakeholders in Stem will be watching closely as the company works to rectify its stock price and secure its position on the NYSE. The information reported is based on a press release statement from Stem, Inc.
In other recent news, Stem Inc (NYSE:STEM). reported lower-than-expected second-quarter revenue of $34 million due to project delays, primarily caused by financing issues and extended interconnection approvals. Despite this, the company's gross margins improved year-over-year. Stem Inc. also announced a revision in its full-year guidance and leadership changes, including the appointment of a new CFO.
The company also saw significant internal changes with the resignation of board member Michael C. Morgan and the departure of its Chief Revenue Officer, Alan Russo. These changes are unrelated to the company's operations, policies, or practices. Stem Inc. has restructured its sales operations to align better with its primary business lines.
Stem Inc.'s financial standing has also been affected, with a notable decrease in revenue due to a revaluation of certain contract hardware guarantees. Despite this, the company exceeded expectations in its software gross margins. The company's 2024 revenue guidance midpoint was lowered from $617 million to $235 million, a 62% decrease, and the adjusted EBITDA expectation was revised to a negative $25 million.
BMO (TSX:BMO) Capital Markets, Piper Sandler, and TD (TSX:TD) Cowen adjusted their outlook on Stem Inc.'s shares. BMO Capital Markets reduced its price target to $0.60 from the previous $1.25, maintaining its Market Perform rating. TD Cowen downgraded the stock's rating from Buy to Hold and significantly lowered the price target to $1 due to project delays affecting the company's performance.
These are the recent developments as Stem Inc. continues to adapt its strategy in response to the evolving demands of the energy storage market.
InvestingPro Insights
As Stem, Inc. confronts the potential delisting from the NYSE, recent financial data from InvestingPro paints a challenging picture for the clean energy company. Stem's market capitalization stands at a modest $96.27 million, reflecting the market's valuation of the company amidst its current difficulties. The company's revenue has seen a significant decline in the last twelve months as of Q2 2024, with a decrease of 13.16%, further complicating its path to recovery.
InvestingPro Tips indicate that Stem is operating with a significant debt burden (Tip #0) and may have trouble making interest payments on its debt (Tip #1), which could be contributing factors to its stock price woes. These financial stressors are crucial for investors to consider, as they could impact the company's ability to execute its business model and return to compliance with NYSE regulations.
Furthermore, the stock price has experienced a substantial drop, with a 1-week total return of -17.54% and a 1-month total return of -48.14%, suggesting high volatility (Tip #7) and a lack of investor confidence. Stem's share price, which previously closed at $0.62, underscores the urgency for the company to address the NYSE's concerns and stabilize its financial standing.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are 9 more tips available that provide deeper insights into Stem's financial health and future outlook. These can be accessed at InvestingPro's dedicated page for Stem (https://www.investing.com/pro/STEM), offering a comprehensive resource for those closely monitoring the company's efforts to navigate its current challenges.
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