In todays video I talk about star peak energy (STPK) and Stem inc.
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STPK is a SPAC which is merging with STEM Inc. in early 2021 and the new symbol will be STEM. The electrical grid is evolving as more renewable energy such as wind and solar are implemented. To stabilize the grid, more battery storage will be needed as production of wind and solar increases. STEM delivers and operates smart battery storage solutions for commercial customers, independent power producers and power utilities. STEM has built the Athena platform, which is a smart solution based on Artificial Intelligence and Machine Learning, which can reduce energy costs, carbon emissions and provide greater reliability for the grid.
The U.S. Energy Information Administration just released their Annual Energy Outlook for 2021, which forecasts out to 2050. The EIA is projecting that by 2050 the energy consumption of renewables will more than double and renewables will account for 42% of electricity generation. Many Fortune 500 companies, including Walmart (WMT) and Amazon (AMZN) have pledged to operate on 100% renewable energy and reduce their footprint to net zero carbon. STEM currently has partnerships with large-scale utilities which include Dominion Energy (D) and Duke Energy (DUK) and many of the largest companies in the U.S., including WMT, AMZN and Apple (AAPL).
STEM sees the storage market as a 25x growth opportunity as the total addressable market will reach $1.2 trillion. STEM is projecting that its $33 million in revenue for 2020 will increase by 345.45% to $147 million in 2021 and over the next five years by 2,760.61% to $944 million. Between the future energy trends, corporate pledges, an evolving energy grid and future infrastructure spending in green energy projects, I think the future is very bright for STPK, which will trade under the symbol STEM once the merger is complete.
Once the merger is complete, the combined company will have three business segments, which include Hardware & Network Integration, Software, and Market Participation. Hardware & Network Integration will provide customers a turnkey solution for energy storage and provide STEM with 10-30% gross margins. The Software segment is a recurring SaaS model with a 100% attach rate secured by 10-20-year contracts. Software provides monthly recurring revenue and cash flow to STEM with an 80% gross margin.
There are also additional applications which a customer can add to their software environment at an additional cost providing an opportunity for additional revenue for STEM. The third segment is Market Participation, where STEM stores excess generation to avoid solar clipping. As STEM increases their customer portfolio, the chances for market participation increase. STEM indicates there is an 80% gross margin in their Market Participation segment and it will grow slowly over time.
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⚠️⚠️⚠️⚠️DISCLAIMER⚠️⚠️⚠️⚠️
I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. The content in these videos shall not be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or other and may be outdated or inaccurate; it is your responsibility to verify all information yourself. This is a Youtube video for entertainment purposes ONLY. IF stocks or companies are mentioned, Michael Wrubel MAY have an ownership interest in them -- DO NOT make buying or selling decisions based on Michael Wrubel's videos. If you need advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer/etc. financial advisor, or the appropriate professional for the subject you would like help with. Linked items may create a financial benefit for Michael Wrubel. Any use of other media is by fair-use or license only.
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