Is Stem (STEM) Setting Up for a Breakdown?

Stem Inc. (STEM) is a provider of energy storage systems. The company bundles third-party hardware with its proprietary Athena software to provide customers a turnkey solution. Stem sells its solutions to commercial and industrial customers as well as independent power producers and renewable developers…

Stem Inc. (STEM) recently reported record revenue in its third quarter results. Sales rose 334% year over year due to a rise in its backlog that grew 25% from the previous quarter. There is an especially high demand for its smart energy solutions, which are enabled by its Athena platform.

The company looks solid based on fundamentals as its current ratio is 8.3 and its debt to equity is 0. Analysts expect sales to jump 114.7% and earnings to rise 82.9% next year. However, the stock appears overvalued with an EV/EBITDA of 73.8. STEM’s performance has been mixed since August. This is evident in the chart below.

Take a look at the 1-year chart of STEM below with added notations…

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