ESS Tech tumbles 19% on disappointing results, analyst downgrades

Shares in ESS Tech Inc (NYSE:GWH) tumbled nearly 19% in premarket trading Thursday after the energy storage solutions provider reported much worse-than-expected results for the fiscal Q3 2024.

The company posted a third-quarter loss per share of $1.90, significantly wider than the $0.10 loss per share that analysts had anticipated.

ESS generated a revenue of just $360 thousand for the period, a far cry from the $5.29 million consensus estimate.

“We continue to make strong progress on our key operational initiatives, but have faced challenges that have delayed our revenue ramp,” said Eric Dresselhuys, CEO of ESS.

Dresselhuys said that ESS’s Australian customer has achieved significant milestones, including securing contracts with major utilities and obtaining funding to construct a factory to meet the high demand for long-duration energy storage in Queensland.

However, he noted that delays in finalizing this funding have “affected our ability to ship and recognize revenue in Q3 for units that were already built.”

“We are receiving payments and are shipping units now so we are optimistic we will get this over the finish line in the fourth quarter and that, coupled with EC product shipments, should lead to $9 to $11 million in revenue for the year, leading to meaningful year-on-year growth,” he added.

Following the report’s release, Oppenheimer analysts downgraded the ESS stock to Perform as they await more clarity on the company’s capitalization.

“We are stepping to the sidelines looking for clarity on capital structure and incremental consistency on delivery schedules, noting that we continue to see a significant need for long-duration storage technologies and believe GWH will prove a long-term leader in the segment,” analysts led by Colin Rusch wrote.

Separately, Baird analysts also cut their rating on the stock to Neutral, citing current market conditions and “slower-than-expected adoption.”

“We would look for signs of increased adoption/installations combined with additional financing before being buyers,” they noted, trimming the price target on ESS shares from $14 to $9.