Well done on the writeup!
From a product or narrative perspective the company sounds good with backup energy systems that will be useful for data center energy storage. It’s with the financials that give me some pause though,
While revenue is 15.2M +1597%, they had a gross margin of -203%, EBITDA of -61M and net income of -223M in the latest quarter. They are scaling up significantly in a years are projected to have 500M quarters. The issue I see is there can be a lot of blockers on the way to scaling up like that, and they haven’t proven their business model can be profitable yet.
I would prefer to wait here and see that the company can step up revenue and profitability before investing. There’s a pretty interesting thread from years back where I had started a position in Amprius AMPX back when they had a -150% gross margin. Saul was pointing out they would be a money losing machine, while back then I was more on the side of how compelling this story sounds. Now I am more likely to want to see a business model really working.
One of the reasons I like Electrovaya a lot is they are scaling up in the same industry but they are already GAAP profitable, and have 1/10th the valuation of EOSE. They might not be able to scale up as fast as EOSE, but they have already proven they can control costs while scaling. That gives me a lot more confidence that the economics of the business are already working.
I’ll add that I’ve had my eye on Amprius AMPX, and Enovix ENVX for a long time to see if either one of these companies can really deliver on their promises. So far it’s been a lot of project delays and issues with scaling up. I’d really like to see one of these companies like EOSE, AMPX, or ENVX hit scale and get above that 100M revenue line with reasonable profitability to have some confidence. I do believe energy storage systems are likely to have a bright future, I just want to see that play out in the numbers before investing.