Shares of SES AI (SES 18.54%) soared on Friday, following the battery materials researcher's impressive first-quarter report. The stock rose as much as 45.3% in the morning session, backing down to a milder (but still huge) 23.8% gain as of 3:25 p.m. ET.
Your average Wall Street analyst had expected SES AI's bottom line to show a net loss of approximately $0.05 per share. That would have been comparable to the year-ago period's result. Instead, the company achieved a breakeven earnings result. Revenues landed at $5.8 million, up from $2 million in the previous quarter with no material revenues to report in the first quarter of 2024.
The price gain didn't lift SES AI's shares to all-time highs. Instead, the stock returned to a level it hasn't sustained since the summer of 2024. The company's advanced battery technologies are brand new and largely unproven, so both SES AI and its investors are only starting to understand how its business opportunity will work out in the long run.
That being said, SES AI looks promising. As the company name suggests, SES AI is applying artificial intelligence (AI) tools to research new battery technologies. Potential target markets include electric vehicles, drones, and humanoid robots.
I'm not ready to buy this volatile micro-cap stock quite yet, as it is changing hands at a terrifying 193 times trailing sales. It may be worth watching over time, especially if it can present a few robust client deals in the next year or two. Better batteries are always welcome, and the company is off to a good start.
However, keep in mind that SES AI burned through $22.8 million of negative operating cash flows in this quarter, leaving $240 million of cash and short-term investments on the balance sheet. SES AI could exhaust those cash supplies quickly if the hunt for committed clients takes too long. In other words, SES AI balances long-term growth potential against financial risk in the short term.
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