Short Ess Tech Inc. (NYSE: GWH) – Bonitas Research
ESS Tech (GWH) faces critical allegations of misrepresenting battery technology, zero revenue, and failed customer deployments. Bonitas Research exposes potential 85% stock decline, highlighting iron flow battery startup's commercial viability challenges and investor skepticism.
Bonitas Research has released a scathing report on ESS Tech (GWH), claiming the iron flow battery maker has misrepresented its customer installations, technology deployments, and revenue potential while facing imminent cash depletion.
Stock info:
- Ticker: GWH (NYSE)
- Position: Bonitas Research is short GWH shares
Why it matters:
- Despite claiming multiple "validated" and "field proven" battery installations at high-profile sites, Bonitas found evidence that all six advertised deployments were either abandoned, replaced with competitors' technology, or generated zero revenue
- ESS reported no revenue from January 2019 to June 2021 despite claiming a "blue-chip customer base" including the US government, UCSD, and major utilities
- The company's iron flow redox battery technology, based on 1970s principles using basic materials (iron, salt, water), shows no competitive advantage and has been rejected by potential customers in favor of alternatives
- Major early investors like BASF ($1.5M investment) declined to participate in follow-on funding rounds, suggesting lack of confidence in the technology
- ESS was reportedly near bankruptcy before being rescued by a SPAC merger in 2021, and now faces rapidly depleting cash reserves
- Bonitas projects an 85% stock price decline based on cash-per-share analysis and the company's inability to generate meaningful revenue
State of play:
- Stone Edge Farm, prominently featured in ESS marketing as a successful 2015 installation, abandoned ESS's battery and replaced it with competitors' systems
- University of California San Diego (UCSD) no longer lists ESS among its energy storage partners, contradicting company claims about an operational system there
- San Diego Gas & Electric chose a vanadium battery from Sumitomo Electric Industries over ESS's technology
- The US Army Corps of Engineers contract with ESS was essentially a zero-cost trial that generated no revenue
- Despite high-profile backing from Bill Gates' Breakthrough Energy Ventures and SoftBank-related entities, ESS has failed to convert investor interest into commercial success
- Recent large order announcements from SB Energy may be suspect given SB Energy's substantial investment in ESS stock
FAQs:
What is ESS Tech's core technology?
ESS Tech develops iron flow redox batteries for energy storage, using iron, salt, and water as basic input materials. The technology is based on principles dating back to the 1970s.
Why does Bonitas Research believe ESS Tech is overvalued?
Bonitas argues that ESS has misrepresented its customer installations, has no operational deployments generating revenue, faces severe cash depletion, and uses technology that hasn't demonstrated commercial viability despite a decade of development.
What evidence does Bonitas present about ESS Tech's customer installations?
The report documents that all six installations ESS claimed in investor presentations were either abandoned, replaced with competitors' technology, or generated no meaningful revenue. This includes installations at Stone Edge Farm, UCSD, and projects with the US government.
How has ESS Tech remained in business without generating revenue?
According to the report, ESS has relied on multiple funding rounds from investors, including a SPAC merger in 2021 that provided cash when the company was reportedly near bankruptcy.
Who are ESS Tech's major investors?
ESS has received investments from BASF Venture Capital, Bill Gates' Breakthrough Energy Ventures, SoftBank-related entities like SB Energy, and others through its SPAC merger and PIPE investments.
What is the projected downside for ESS Tech's stock according to Bonitas?
Bonitas projects approximately 85% downside for GWH stock based on cash-per-share analysis and the company's inability to generate meaningful revenue or demonstrate commercial viability of its technology.
Has ESS Tech responded to these allegations?
This summary does not include any response from ESS Tech to the Bonitas Research report. Investors should check for the company's official response to these allegations.
Disclaimer
This summary is based on a report by Bonitas Research. For the full, detailed analysis, please refer to the original source material: https://www.bonitasresearch.com/company/ess-tech-inc-nyse-gwh/
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