Anxious over Energous

Shareholders were anxious to hear from the management of Energous Corporation (WATT:  Nasdaq) during the company’s regularly scheduled earnings conference call held this week.  Needed was an update on the much anticipated debut of the company’s WattUp wire-free charging technology in mobile devices.  Energous’ product plans have morphed over the years as one limitation after another was discovered both by Energous engineers as well as those employed by prospective customers.   

Indeed, the stock has traded off in recent weeks as a short-seller report made the rounds, alleging design failures of one sort or another.  The WattUp receivers rely on multiple antennas to collect micro energy beams created by a radio frequency (RF) transmitter. The key to success in the charging system is how Energous engineers have designed a ‘pocket-forming’ technology that directs the energy to the receiver by changing the shape and content of the RF waves.  The receiver chip set then converts the RF signal to a direct current (DC).

Energous management did not disappoint  -  at least in terms of an update.  During the conference call this week discussing financial results in the second quarter ending June 2017, Energous announced receipt of the first orders for production quantities of chipsets incorporating its WattUp wireless charging technology.  Shipments to customers are scheduled for the quarter ending September 2017.  Final products with the WattUp technology on-board are expected to reach consumers before the end of 2017.

Shareholders have long awaited first commercial orders for the WattUp technology.  Additional accomplishments in the quarter suggest that the business pipeline could produce additional orders.  Active customer engagements increased to 76 in the quarter from 68 in the previous three months.  The Company also claimed milestones were reached on projects with strategic partners that are aimed at commercial sales.  One glitch in the commercialization process is the fact that Energous has yet to receive all required regulatory approvals.  Tests are planned to demonstrate compliance with Federal Communications Commission regulations for substantial power-at-a-distance transmitters.

While the Company does appear to be near full commercial production and sales, shareholders appear unimpressed. On the quarter announcement, the stock began a slide down, setting a new 52-week low in the final day of trading last week.  Granted there was something of a downdraft last week in the small-cap sector related to broader market issues.  However, we believe the old axiom ‘buy on rumor, sell on news’ might have been at play in trading of WATT last week.  For those who are contrarian minded, this might be the opportunity to snap up shares of ahead of Energous entering full commercial stage.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.