Mackenzie Tatananni

Fluence Energy stock plunged on Tuesday after the energy-storage company cut guidance, dramatically missed Wall Street's fiscal-first-quarter revenue estimate, and posted a net loss.

Shares plummeted 48% to $6.77. The sharp decline came after the company reported revenue of $186.8 million for the quarter ended Dec. 31, marking a 49% decrease from the prior year and falling short of analysts' calls for $362.5 million, according to FactSet.

Fluence also posted a net loss of $57 million in the quarter, wider than the $25.6 million loss posted a year ago.

The bad news didn't stop there. The company slashed its full-year guidance, citing "disappointing" contract delays and crushing competitive pressure.

Fluence lowered its fiscal-year revenue guidance to a range of $3.1 billion to $3.7 billion from a prior range of $3.6 billion to $4.4 billion. Analysts surveyed by FactSet had expected $3.9 billion.

Fluence also trimmed its estimates for adjusted earnings before interest, taxes, depreciation, and amortization for the fiscal year to a range of $70 million to $100 million. An earlier range called for $160 million to $200 million, while analysts forecast $167 million.

Management attributed the decrease in Ebitda to "lower expected revenue, and lower expected gross margins on recently signed contracts."

CEO Julian Nebreda acknowledged the "disappointing" delays, but asserted that the company continued to see "a robust utility scale battery storage market globally," as well as "strong interest" in the company's U.S. domestic content product offering.

Fluence was founded in 2017 as a joint venture between Siemens and AES Corporation. The Arlington, Va.-based company, which offers energy storage products, is a Wall Street darling. Of 23 analysts surveyed by FactSet who cover Fluence, 15 have Buy or equivalent ratings, seven are at Hold, and one has a Sell rating.

It is unclear if the latest report will trigger a wave of downgrades and price target adjustments, but the numbers appear to have swayed at least one firm.

On Tuesday, Guggenheim analysts led by Joseph Osha downgraded Fluence stock to Sell from Buy, and slashed the price target to $6 from $26. (Osha himself is the lone Bear included in the FactSet survey.)

"The energy-storage market is still growing, but FLNC's struggles to execute even in the currently favorable environment have caused us to reassess our approach to valuation," the analyst wrote.

The back-end loading that has characterized Fluence's revenue outlook has always posed a challenge, as it leaves the company dependent on shipping a lot of product in a short amount of time, Osha continued.

More concerning is Fluence's sharply reduced Ebitda guide, "and what it implies in terms of the company's gross margin and pricing power," Osha wrote.

Also on Tuesday, Seaport Research Partners analyst Tom Curran reiterated a Buy rating on Fluence stock with a$21 price target.

Despite his optimism for Fluence stock, Curran conceded that the latest results were disappointing. While the past few months "priced in much bad," the latest results were "still awful for sentiment," and a possible catalyst for what he deemed "investor doom spiraling."

"This report corroborates concerns we've been emphasizing about escalating competition, the risks of which our recent target multiple compression attempted to capture, but suggests FLNC may already be struggling more than we anticipated," Curran wrote.

Management, he continued, "must make a convincing case for why/how the company's Ebitda margin will remain in positive territory, even if on a lower trajectory."

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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February 11, 2025 10:11 ET (15:11 GMT)

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