![]() On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. We’ll have to see if the move holds, but I’m willing to bet STEM gives up much of today’s gains over the next few trading sessions. Despite a relatively muted valuation, the fundamentals of this company don’t suggest that a 7% surge is warranted. New investors ought to be aware of the risks with this company before stepping in. In either case, I remain skeptical about the recent move in STEM stock. With the relative outperformance of companies leveraging AI lately, this could be partly responsible for today’s move. ![]() The company’s Athena platform provides battery hardware and software-enabled services for energy storage systems, powered by AI. Additionally, it could be possible that ongoing interest around artificial intelligence-related companies could be boosting Stem today. Given its high level of short interest, speculators could be betting on a potential squeeze in the near term. That said, there could be a few reasons why STEM stock is seeing upside today. And in the meantime, the ongoing litigation is likely to hang over Stem’s head as well as remain a risk for new investors. That’s because any sort of resulting payout to investors is likely to hurt the company’s financials, which already appear to be in rough shape. Indeed, many of the allegations made by these law firms ought to concern investors.Īny sort of impropriety with respect to disclosures is a big red flag for investors. Generally speaking, when a company is slapped with a number of class-action lawsuits, that’s not a good thing for its stock price. Let’s dive into what investors may want to make of these lawsuits - and STEM stock’s impressive move in light of these developments. Allegations of “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” have been cited as key issues which investors may not have been aware of when making their investments. These lawsuits all seem to center on the idea that shareholders should be compensated for losses that resulted due to false and/or misleading statements in the company’s previous disclosures. Smith, Bernstein Liebhard and Robbins Geller Rudman & Dowd have filed lawsuits over the past week, alleging wrongdoing with the company’s disclosures provided as part of its SPAC merger process. These significant losses have led certain law firms to step up and assert wrongdoing with the company’s previous special purpose acquisition company (SPAC) merger to go public. STEM stock has lost more than 40% of its value so far this year. This move also comes despite a rather bearish trend for Stem in 2023. Currently, STEM stock is up more than 7% on a rather bearish day for most equities. One of the more intriguing stocks that investors are watching today is Stem (NYSE: STEM).
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