ESS Tech Falls 19% on Unexpected Q3 Losses
Shares in ESS Tech Inc. (NYSE: GWH) plunged nearly 19% in premarket trading on Thursday, following a significant earnings miss for fiscal Q3 2024. The energy storage provider reported much weaker-than-expected results, disappointing investors and analysts.
Disappointing Financial Results for Q3 2024
ESS reported a third-quarter loss per share of $1.90, a stark contrast to the anticipated $0.10 loss per share. Revenue for the period came in at just $360,000, missing the $5.29 million consensus estimate by a wide margin.
Operational Progress Amid Revenue Challenges
Despite these setbacks, CEO Eric Dresselhuys highlighted ongoing progress in key operational areas. Dresselhuys noted ESS’s Australian customer has achieved important milestones, such as securing major utility contracts and acquiring funds to construct a new factory aimed at meeting Queensland’s demand for long-duration energy storage.
However, Dresselhuys acknowledged that delays in finalizing this funding prevented the company from shipping completed units and recognizing revenue for Q3.
Optimism for Q4 Revenue Growth
Dresselhuys expressed optimism for Q4, stating that shipments and payments are now moving forward. He projected Q4 revenues between $9 to $11 million, which would mark meaningful growth compared to the previous year, driven by the EC product line and shipments to Australia.
Analyst Downgrades Reflect Market Concerns
Following the earnings report, Oppenheimer downgraded ESS Tech to “Perform,” citing a need for more clarity on capital structure and delivery schedules. Analyst Colin Rusch highlighted the long-term potential for ESS in long-duration energy storage but recommended a cautious approach in the short term.
Similarly, Baird analysts downgraded their rating to “Neutral,” citing current market conditions and slower-than-expected technology adoption. They lowered their price target for ESS from $14 to $9, emphasizing the need for greater adoption and additional financing to improve confidence.
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