If you think about it, there are many reasons why Fluence isn't getting much love as a stock.
1) It's a penny stock, with low volumes and big price variations on a daily basis. For any investor, this would be a red flag. For any institutional investor, buying/selling a big position is very risky business. Buying a big chunk would send the price higher and selling out would smash it. De-listing is also always a risk with penny stocks, no matter how much "potential" they show.
2) A quick look at the price chart shows a never-ending downtrend. When people say : "last chance to buy at these prices", they usually get disappointed pretty quickly.
3) Anyone who has ever invested in Fluence is probably in the red, meaning a slight increase in price can be seen as an opportunity to sell out.
4) Our overall revenue is materially lower now than it was years ago (FY2022 Revenue was $119M).
5) Promises of break-even/turning a profit never materialise. We have no visibility going forward as to what our profit margin might be.
6) There are been so many strategies that have failed that it's hard to be a believer in management. It seems current management wants to exit China/SEA entirely according to the latest investor presentation. Now we are focusing on North America but what is to say we'll be any more successful there than we've been elsewhere ? Emefcy started with China as sole focus. The merger with RWL was supposed to de-risk the China-only approach by going global. Now we are focusing on the USA and we are gaining traction but if you look at the average value of our contracts there, it's around $1M. It's going take a lot of those to create some decent revenue.
7) Add the impact of tariffs to that and you've got the final touch of icing on the cake.
The real question is : as a new investor in Fluence, what would motivate you to invest ?
1) Considerable upside of the share price, given the current valuation of the company around $40M
2) Current management have invested considerable amounts in the company, unlike previous directors. They also have experience and knowledge of the US water business. For once, the stars are aligned. They want to company to succeed as much as anyone here.
3) In the US, we have products that are useful and good value (SPS) compared with legacy Custom Engineered Solutions which rural communities can't afford, and there is regulatory pressure to upgrade WWTP. However there are competitors there and the federal government might roll back some of those regulations.
4) Having those smaller contracts means we can go for a lot of those and, as management said, that's a de-risking strategy of having to win and manage one or 2 big contracts. Plus a better margin, but we need some high volumes for that, which isn't the case right now.
5) New contracts worth $12M for Q1 2025, which is 22% higher than Q1 2024. We really need this momentum to keep going, not just a one-off uptick. Revenue also needs to keep growing organically for Q2 2025 YoY and that needs to be ex-Ivory Coast contribution, which is just a sugar hit that won't last.
Today, the SP is down 7% on just $26 000 worth of trades. What that tells you is that there just isn't enough interest in this stock to keep it going higher. We'll only see that happen when we've achieved some sustainable growth, which hasn't happened yet.
On personal note, and despite what I said about the never-ending trend, when I see the SP under 4¢, I just want to buy some more...I'll be damned !
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