Newly Public Fluence Energy Near Buy Zone With Strong Momentum

Key Points

• Fluence Energy cleared resistance above $26.78 on June 6, signaling a potential buying opportunity.
• Quarterly revenue of $698.19 million trounced analysts' views.
• The company boosted its revenue guidance and pulled forward its profitability forecast.
• Revenue growth between 78% and 135% in the past three quarters reflects strong market demand for Fluence's products and services.
• The company is in the energy storage market, which is growing in demand. 

Fluence Energy Inc. NASDAQ: FLNC, which went public in 2021, has posted strong price gains following a dismal 2022. Fluence specializes in the fast-growing energy storage space. 

The stock is near a buy zone, having cleared resistance above $26.78 on June 6. It dropped a little over 5% from that point on the two subsequent days’ trading, but it’s worth keeping an eye on, as it’s been the subject of numerous analyst upgrades. 

Fluence was formed in 2018 as a joint venture between Siemens AG OTCMKTS: SIEGY and The AES Corporation NYSE: AES. It was spun off as its own entity three years later. 

Fluence stock is up almost 27% since its most recent quarterly report. The company reported a loss of $0.21 a share, but that beat views, according to Fluence Energy earnings data. Revenue of $698.19 million absolutely trounced views, which called for sales of $417.51 million.

Raising 2023 Guidance 

The company also raised its fiscal year 2023 total revenue guidance range to $1.85 billion to $2.0 billion, and pulled forward its profitability timeline. It now expects to be close to breakeven by the fourth fiscal quarter of 2023. 

Analysts forecast a loss of $0.64 per share for the full year, but see a pivot to profitability in fiscal 2024, with earnings of $0.11 a share. 

Revenue grew between 78% and 135% in the past three quarters. That level of growth is a strong indicator of a company with products and services in strong demand, which can boost share price. 

Siemens and AES are still significant shareholders in Fluence. The company has a market capitalization of $4.45 billion, placing it in mid-cap territory. It has 175.5 million shares outstanding, but only 56.1 million shares in float. 

Wide Bid-Ask Spreads

Because there are relatively few shares available to the public, including institutions, the stock is less liquid than others. That means there can be some fairly wide bid-ask spreads, which you can see using a daily view of the Fluence Energy chart, set to either bars or candlesticks.

The stock has a beta of 2.0, meaning it’s twice as volatile as the broader market. That’s not exactly unusual; new IPOs tend to exhibit higher volatility, for reasons including limited trading history and lower liquidity. 

None of that should be a problem for anyone who’s contemplating a swing trade of several weeks or months, or holding the stock for a longer period of time. A stock with strong potential can post big gains, even helped by volatility that can, at times, send it higher than the wider market. 

Mid-Caps Can Post Bigger Gains

In addition, mid-caps frequently post bigger price gains than larger, more established companies. 

Its recent returns are:

• 1 month: 43.11%
• 3 months: 24.93%
• Year-to-date: 49.62%

Fluence is an excellent example of a newly public company that’s well situated for big price gains in the coming years. Companies within their first few years on the public markets often deliver significant returns because investors are eager to get in early on promising growth potential. 

In Fluence’s case, the company is part of a growth industry: It designs and builds batteries and software for electricity storage. These systems help manage electrical grids, something that’s been in the spotlight with extreme hot and cold temperatures wreaking havoc on grids in some U.S. locations in recent years. 

Helping The Texas Power Grid

As an example, one of Fluence’s technologies is being expanded for use in Texas’ ERCOT market, which had notable failures during cold weather in 2021. 

Fluence technologies can also help balance power usage when renewable energy sources like solar and wind fluctuate. 

The company’s offerings are broken out into three components: Energy storage, services, and digital applications and solutions. 

Leveraging Partnerships With Founders

The company is continuing to leverage its partnerships with AES and Siemens, which provide built-in and growing customer bases and an international sales channel. Fluence also has a relationship with major investor QIA, an affiliate of the Sovereign Wealth Fund of Qatar. Fluence says QIA can introduce the company to additional technology partners, customers and suppliers.

Already, Fluence energy storage products are deployed in at least 44 markets in 36 countries. Customers include utilities, independent power producers, developers, conglomerates, and commercial & industrial users. customers. The largest percentage of customers is in the U.S., followed by Australia and the U.K.