In this segment from Motley Fool Live, recorded on Jan. 6, Fool contributor Jason Hall examines Stem (STEM 1.76%), a software company that is the market leader in smart energy storage.
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Jason Hall: Stem is a really interesting company that's right at the forefront of the transition in the energy industry away from fossil fuels.
This is a software company. It's an AI-driven cloud software company. Their primary product is called Athena, and Athena is a software tool that companies can use, whether it's a utility, whether it's a large power user like a manufacturer or an Amazon (AMZN -1.64%) that has lots of distribution centers or a Walmart (WMT 1.32%) with lots of retail stores to take their energy and maximize the cost and things like carbon footprint.
The way they operate is they sell batteries, these large energy storage battery systems, they're very agnostic. It doesn't matter that they're not focused on selling a certain brand of the battery, they're really focused on the fact that it's just a commodity, and the way companies can leverage and get the most out of it is with Athena, their software.
What Athena does is manages the ins and the outs of the power, to get the lowest cost of getting the power in and maximizing the value of getting it out. Whether you're an energy consumer or whether a utility or an energy producer, so they're really good there.
I'm going to pull up this quick slide and show some of the neat things about the business. They have over 950 systems operating or contracted for Athena. They're the market leader, which I think is really interesting. They have over 35 utilities and a half dozen grid operators that are working with them.
By 2050, the expectation is $1.2 trillion in integrated storage is going to be deployed. That's a massive opportunity over the next several decades, a 35 times increase in battery storage capacity over the next eight years, it's a massive opportunity here.
Let me just pull up a couple of other things that I think are interesting about the company. Let's talk about leadership. John Carrington, he's not the founder, but I think he's pretty close to a founder for the company. He was brought in to lead the company in 2004-2005. He's led it since then.
The company just went public via SPAC in April of this year. Carrington's fingerprints are all over this business. I think there's a lot of value to that and the stability of having him as a leader.
Now, something recently just happened too, I think is a big deal. Stem just announced the acquisition of AlsoEnergy, which is a solar asset management platform. What's interesting, I like about this acquisition is you look in the middle here, there's about 30% of the customers between the two companies that are shared, but they don't compete, they do different things.
This is Stem acquiring a business that's adjacent that has a lot of alignments, but it doesn't compete with. It expands what it can offer to customers and at the same time growing its business.
I think this is a really interesting company and shares are down like 60% from the high, it's caught up in this big tech market, tech sell-off. I think this is a company that should be really high in people's watch lists.
