This week, the law firm of Bernstein Liebhard LLP announced that it had filed a class-action lawsuit against California-based energy solutions company Stem (NYSE:STEM). The firm filed the lawsuit on behalf of STEM stock investors because the company allegedly misled investors in both its 2020 merger agreement and 2022 partnership announcement. STEM fell 9% on the news yesterday and is seeing more volatility today.
What do you need to know about Stem lately?
Well, in the filing against Stem, Bernstein Liebhard alleges that the energy solutions company made false and misleading statements in regard to its 2020 special purpose acquisition company (SPAC) merger with Star Peak Energy Transition and 2022 partnership with Available Power (AP).
If you recall, on Dec. 4, 2020, Stem announced the post-merge company would have an estimated equity value of roughly $1.35 billion. Similarly, on Feb. 24, 2022, the company announced that it had entered a strategic partnership with Available Power with a “value of award expected to exceed $500 million across the project portfolio.”
The plaintiff alleges Stem misled investors by inaccurately reporting financial information related to deferred cost of goods sold and inventory due to weakness in its accounting. The plaintiff also alleges that Stem overstated its business prospects, “failed to disclose that software revenue did not make up 100% of the Company’s services revenue” and overstated the benefits reaped from its AP partnership.
So, what else do you need to know about Stem and STEM stock?
STEM Stock Stumbles on Lawsuit, Weak Q4 Earnings
This week’s lawsuit is, in a sense, a follow-up on a scathing Jan. 11 report from Blue Orca Capital. In the report, the firm alleged that Stem falsely claimed that “100% of its services revenue line was attributable to software revenues.” Blue Orca also reported a number of other undisclosed issues with the company’s financial descriptions.
Stem appeared to refute Blue Orca’s allegations in a Jan. 12 response. However, the company “never expressly refuted” the claims about its software revenue.
In its fourth-quarter earnings call, Stem also disappointed investors by falling notably short of consensus revenue estimates and issuing a particularly weak 2023 revenue guidance. Per Barron’s, STEM stock sunk nearly 15% on the report.
With all of these issues at play, Bernstein Liebhard is offering owners of Stem securities the opportunity to receive financial compensation as part of the shareholder class action lawsuit as it pursues the company in court. STEM stock is proving volatile as a result on Wednesday. As of this writing, shares are barely in the green after seeing a sharp drop earlier this morning.
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On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
