Energy storage leader Fluence is poised for success as it sees significant demand from the power-hungry utility sector, according to CEO Julian Nebreda. Despite reporting a net loss in its recent quarter, Fluence’s shares have surged by 13% this week. The company has achieved a record quarterly intake of $1.1 billion in orders, resulting in an all-time high contracted backlog of $3.7 billion. Nebreda anticipates “hypergrowth” as wind and solar energy play an increasingly vital role in the U.S. power grid. Fluence’s innovative technology helps balance supply and demand by storing energy for later use, making it a fundamental component for leveraging the benefits of renewables.
Fluence recently experienced a net loss for the three months ending December 31, after reporting a profit of $4.8 million in the previous quarter. However, the company’s net loss of $25.6 million was 31% lower than the loss it incurred in the same period the previous year. Nebreda emphasized that Fluence’s gross profit margin is now in the double digits, reaching 10.5% on an adjusted basis. Additionally, the company’s cost structure remains stable. Nebreda confidently stated that as the revenue increases throughout the year, Fluence will become profitable and maintain profitability for the entire year. In fact, the company expects to achieve between $50 million and $80 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2024. This positive trajectory suggests promising financial performance in the future.
Fluence’s Funding and Ownership
A joint venture between Siemens and AES, Fluence was established in 2018 and went public in October 2021 at $28 per share. Despite a subsequent drop of approximately 36% to $22.43 per share, Fluence remains an attractive investment opportunity. Currently, Siemens and AES each own 29% of the company, while the Government of Qatar controls another 8%. Wall Street has shown considerable optimism in Fluence, with 73% of analysts rating the company’s stock as a “buy.” The average price target of $32 suggests a potential 43% upside from the closing price on Thursday. With its clean path to profitability and optimistic outlook, Fluence has located itself as an appealing contender in the energy storage industry.
Fluence is well-positioned to benefit from the robust market momentum and favorable legislation surrounding energy storage. Analysts project a 27% compound annual growth rate in industry demand over the next six years, leading to a total of 150 gigawatt hours of energy storage by 2030, according to Bloomberg NEF. This magnitude of storage capacity is sufficient to power 15 million households for one year based on average consumption. Nebreda acknowledges that this figure is considerable and reflects the immense potential for the energy storage industry.
As the demand for renewable energy continues to grow, Fluence is emerging as a leader in energy storage solutions. The company’s strong demand, record-breaking orders, and optimistic financial projections indicate a promising future. With Fluence’s innovative technology, the integration of renewable energy sources into the power grid becomes more viable and efficient. Despite recent losses, Fluence’s position in the market and optimistic industry outlook make it a compelling contender in the energy storage sector.
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