Energous in 2018: The Sudden Rise and the Long, Slow, Decline

With the end of the year looming, and a few days off on my hands, it's time for a "year in review" of my favorite companies like Theranos and uBeam, but let's start with Energous. To place where the company is right now, let's look at the stock price over the last year.

Energous share price over the last year

Energous share price from March 2014 (IPO) to date

It wasn't so long ago that Energous were on top of the world, and 2018 was going to be its year of proving the doubters wrong, but what a difference a year has made. A year ago tomorrow WATT closed at around $8.83 per share and then there was a sudden leap to $33.50 on Dec 28th (closing at $31.57), following announcement of FCC Part 18 approval of their 'mid range' wireless charging, which the media reported as almost a fait accomplis for the company. I covered this in multiple posts, and it was clear to me that this was an approval for a product that could and never would be released - impractical, no true application, ridiculously low charging rates, and in my opinion unsafe. Subsequent lack of announcements on this appear to have proven me right. 

Energous even got a congratulatory tweet from FCC Chair, Ajit Pai, despite his public office not being supposed to promote any company or product. The public and institutions bought and bought, at just the same time the insiders and large holders sold, to the tune of tens of millions of dollars. As you can see that was the peak and after a few bumps it was a long, slow decline for the company to its lowest price ever, of $4.80 per share (Now down over 85% from peak, it was initially offered at $6.00, was $9.50 on launch day, and had a previous all-time low of $4.91 in Jan 2016). 

At the end of October I was noting a $1.50 to $2.00 decline per month, and near 2 months later here we are $3.00 lower, so $1.50 a month continues. This long slow and steady decline seems to be continuing, and if anything seems remarkably steady. Any chance there's a co-ordinated selloff to not spook the rubes?

At this rate the stock will be at zero by the end of March 2019, which is an interesting date because given their ~$12.5m a quarter burn rate and near zero revenues they are essentially out of cash to operate by then. Without a raise or cash injection, Energous have three months left to live. While Energous have filed with the SEC to sell up to $75m of stock, that's now 60% of the market cap. With a continuously declining stock price and no products, who would buy? 

What are their options? Well I have been fully expecting some form of 'goosing' the stock price with a vapourware product launch or similar for CES (essentially, IMO, what they did at the beginning of 2018 following the FCC announcement), but that seems to no longer be an option for them. Take their announcement of the DA2223 chip, for example. It fizzled out with barely a ripple in the stock price. That was announced at the end of November, and is supposedly the receiver chip that will enable Energous on hearing aids and the other markets that will make them billions. Some are even back to saying this is what will get Apple on board, despite them literally putting components of another utterly incompatible wireless technology in their products and announcing that different method as the future (sneaky Apple, misdirecting us like that). These chips have no market availability, no price, no data sheet that any engineer would want - simply some marketing and 'product briefs'. To release it would show there is not a transmitter you can buy to work with it, and if there was you would see how awful the performance is. IMO it's vapourware and Energous will never want their products out in the wild for actual testing, it would show them for the farce they are.

A reader points out to me - it doesn't look like the FCC granted Energous the experimental license to demo their new toys yet, and then the government went on shutdown (turns out the FCC have funds to stay open until Jan 3). They might not get it before CES and have to rely on showing the same things as last year. This might work in their favour, no limited visibility of their next-gen useless crap!

That reader also reminded me there are other ways they attempt to boost the stock such as with 'accidentally' misleading deals and press releases. Earlier this year they announce a deal with IDT International. Most engineers did a double-take on that, as IDT Inc is a large $6bn market cap company that's pretty respected, but closer inspection revealed it's IDT International, a smaller Hong Kong electronics company with around 3% of the market cap of IDT Inc. In one of my earliest blog postings I commented on how companies, and Energous specifically, can use vague and misleading wording in announcements to allow readers to make leaps toward what they think the company said, while remaining perfectly legal and technically accurate. Seems they are still at it.

Other options? Cash injection from Dialog, who recently got a bit of a windfall from Apple? Seems like it would be a tough sell to its shareholders for a public company, but I've seen dumber things happen. They might market it as investing in a seriously undervalued company, and that there's huge upside. Given the management invested prior, it might be they have to keep going rather than admit they bought a lemon before and their judgement was poor. It wouldn't be the first time.

Last option I can think of is that the company still goes ahead with a stock sale under poor terms and raises just enough for a last hurrah for the executive team and bonuses all round. This has been a roller coaster of surprises with this company as to how long they can keep it going, so who knows.

As to what else happened in 2018 for Energous, it was pretty much a continuation of what has gone on before. Poor revenue at earnings calls, repeatedly delayed long range charging systems (time to carrot - a near constant 18 months), quiet downgrading of performance specs, multiple announced products then either cancellation or lack of availability, but really the highlights came with Aristides Capital presentation on Energous, and the earnings call in August where someone finally called bullshit on the CEO. If you haven't already, watch the Aristides Capital video and listen to the Q&A on the August earnings call.

So we're really in a wait and see what happens position. I've said before that I think Energous are geniuses, not in the technology sense but in how to extract millions of dollars, seemingly perfectly legally, while producing nothing that was ever promised. Most startups have to actually get bought to make money but all you seem to need is an early IPO, some marketing hype, and hopeful but gullible investors. They may have a new business model here and as unique as their ascent has been, I fully expect their decline and end to surprise us even more.

(Repeating the seemingly obligatory statement - I have no financial position, short or long, in Energous or any related company. Nor have I ever had any such positions.)

Edit: Someone on Stocktwits linked this post so I got a ton of hits from there. Apparently I'm a bitter long who lost money and just bashing. And before Christmas too, what a Scrooge. But not one rebuttal or serious argument regarding what I've said from them. Thank you to those few on there who point out that I'm sticking with the facts and that it's not financially motivated.