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NEW YORK, May 21, 2023 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Stem, Inc. (“Stem” or the “Company”) f/k/a Star Peak Energy Transition Corp. (“STPK”) (NYSE: STEM; STEM.WS; STPK; STPK.WS; STPK.U), and certain officers and directors. The class action, filed in the United States District Court for the Northern District of California, and docketed under 23-cv-02329, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Stem securities: (a) pursuant and/or traceable to the Offering Documents (defined below) issued in connection with the merger (“Merger”) consummated on April 28, 2021 by and among the Company, STPK Merger Sub Corp. (“Merger Sub”), and Stem, Inc., a private Delaware corporation (“Legacy Stem”); and/or (b) between March 4, 2021 and February 16, 2023, both dates inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased or otherwise acquired Stem securities pursuant and/or traceable to the Offering Documents issued in connection with the Merger, and/or during the Class Period, you have until July 11, 2023 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Stem purports to operate as a digitally connected and intelligent energy storage network provider in the U.S. and internationally. The Company offers energy storage systems sourced from original equipment manufacturers and provides an artificial intelligence (“AI”) platform called Athena, which offers battery hardware and software-enabled services to operate the energy storage systems. The Company’s management has asserted that Stem’s services revenue line is purportedly comprised entirely of software revenue. Prior to the Merger, the Company operated as a publicly traded special purpose acquisition company.
On December 4, 2020, the Company announced that it had entered into a definitive agreement for the Merger with Legacy Stem, a purported global leader in AI-driven clean energy storage systems, that would result in a combined company with an estimated equity value of approximately $1.35 billion.
On December 17, 2020, the Company filed a registration statement (“Registration Statement”) on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) in connection with the Merger, which, after several amendments, was declared effective by the SEC on March 29, 2021.
On March 30, 2021, the Company filed a joint prospectus and proxy statement (the “Prospectus” and, together with the Registration Statement, the “Offering Documents”) on Form 424B3 with the SEC in connection with the Merger, which incorporated and formed part of the Registration Statement.
On April 28, 2021, the Company consummated the Merger whereby, among other things, Merger Sub merged with and into Legacy Stem, with Legacy Stem surviving the transaction as a wholly owned subsidiary of the Company; the Company renamed itself “Stem, Inc.”; and the Company began operating Legacy Stem’s business.
Leading up to and following the Merger, Stem repeatedly represented that its unique AI-driven approach to energy storage management and related software products and offerings, which it offered alongside its hardware products and offerings, afforded the Company significant competitive advantages in attracting and retaining business partners and customers, and that these advantages differentiated Stem’s business from its competitors.
On February 24, 2022, Stem issued a press release announcing that it had entered into a strategic partnership with Available Power (“AP”), a purported developer of distributed energy resources and microgrid systems for commercial and industrial real estate, with a “[v]alue of award expected to exceed $500 million across the project portfolio” and that “provide[d] Stem exclusive rights to 100 standalone energy storage projects in Texas” (emphases in original). Stem attributed the partnership win to its Athena software, thereby apparently validating Stem’s narrative that its unique AI-driven approach to energy storage management differentiated the Company from competitors and would lead to significant growth and earnings.
The complaint alleges that the Offering Documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Additionally, the complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, the Offering Documents and Defendants made false and/or misleading statements and/or failed to disclose that: (i) Legacy Stem suffered from material weaknesses in internal control over financial reporting related to accounting for deferred cost of goods sold and inventory, certain revenue recognition calculations, and internal-use capitalized software calculations; (ii) the Company had overstated Legacy Stem’s and its own post-Merger business and financial prospects; (iii) Stem’s software revenue did not make up 100% of the Company’s services revenue; (iv) Stem had overstated the benefits expected to flow from its AP partnership; and (v) as a result, the Offering Documents and Defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.
On March 15, 2021, in an SEC filing, the Company revealed that Legacy Stem suffered from various previously undisclosed material weaknesses in its internal control over financial reporting related to, inter alia, “accounting for . . . deferred cost of goods sold and inventory,” “the review of certain revenue recognition calculations,” and “the review of internal-use capitalized software calculations.”
On this news, Stem’s stock price fell $1.19 per share, or 3.36%, to close at $34.24 per share on March 15, 2021.
On February 24, 2022, Stem reported its fourth quarter (“4Q”) and full year (“FY”) 2021 financial results. Among other items, Stem reported FY 2021 earnings per share (“EPS”) of -$0.96, missing consensus estimates by $0.05, as well as FY 2021 revenue of $127.37 million, missing consensus estimates by $19.58 million.
On this news, Stem’s stock price fell $2.43 per share, or 21.62%, to close at $8.81 per share on February 25, 2022.
On January 5, 2023, Stem released an investor presentation deck that it had prepared in connection with its attendance at the Goldman Sachs Global Energy and Clean Technology Conference, wherein the Company revealed that its 2022 bookings backlog was “partially offset by [a] Stem-initiated contract cancellation (~$130M) due to partner non-performance on [an] agreed timeline”.
Following release of the investor presentation deck, Stem’s stock price fell $0.75 per share, or 8.78%, to close at $7.79 per share on January 5, 2023.
On January 11, 2023, Blue Orca Capital (“Blue Orca”) issued a report alleging various additional undisclosed issues with Stem’s business and financial prospects, including, among other things, that the Company had overstated its software revenues by falsely claiming that 100% of its services revenue line was attributable to software revenues.
On January 12, 2023, Stem issued a response to the Blue Orca report, purporting to refute Blue Orca’s claims regarding, inter alia, the Company’s software revenues. In doing so, however, the Company never expressly refuted Blue Orca’s claims that software revenue did not make up 100% of the Company’s services revenue. Separately, Stem’s response to the Blue Orca report clarified that the Company’s “canceled . . . booking of approximately $135 million in the fourth quarter of 2022”—as first disclosed in Stem’s January 5, 2023 investor presentation deck—was “attributable solely to DevCo projects with [AP]” and that “[w]e have not recorded any revenue from any [AP] projects and there are no additional projects in the backlog with this former partner.”
Then, on February 16, 2023, Stem reported its 4Q 2022 results and 2023 guidance. Among other items, the Company reported 4Q revenue of $156 million, versus consensus estimates of $166 million, and issued disappointing FY 2023 revenue guidance of $550 million to $650 million, which was mostly below consensus estimates of $647 million.
On this news, Stem’s stock price fell $1.44 per share, or 14.78%, to close at $8.30 per share on February 17, 2023—a 69.32% decline from the Company’s first post-Merger closing stock price of $27.05 per share on April 29, 2021 (the “Initial Closing Price”).
As of the time the complaint was filed, Stem’s common stock was trading significantly below its Initial Closing Price and continues to trade below its initial value from the Merger, damaging investors.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
Robert S. Willoughby
888-476-6529 ext. 7980