Stem, Inc.
| Company Name | Stem, Inc. |
| Stock Symbol | STEM |
| Class Period | March 04, 2021 to February 16, 2023 |
| Lead Plaintiff Motion Deadline | July 11, 2023 |
On March 15, 2021, Stem disclosed that it had previously undisclosed material weaknesses in its control over financial reporting related to “accounting for . . . deferred cost of goods sold and inventory,” “the review of certain revenue recognition calculations,” and “the review of internal-use capitalized software calculations.” On this news, Stem’s stock price fell $1.19, or 3.4%, to close at $34.24 per share on March 15, 2021, thereby injuring investors.
On January 11, 2023, Blue Orca Capital published a report alleging various undisclosed issues with Stem’s business and financial prospects, including that the Company had overstated its software revenues by falsely claiming that the entirety of its services revenue line was attributable to software revenues.
On, February 16, 2023, Stem released its fourth quarter 2022 results and its 2023 guidance, reporting a fourth quarter revenue of $156 million, missing consensus estimates by $10 million, and issued disappointing 2023 revenue guidance, missing consensus estimates by as much as $97 million. On this news, Stem’s stock price fell $1.44, or 14.8%, to close at $8.30 per share on February 17, 2023, thereby injuring investors further.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Offering Documents and Defendants failed to disclose to investors that: (1) Legacy Stem suffered from 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; (2) the Company had overstated Legacy Stem’s and its own post-Merger business and financial prospects; (3) Stem’s software revenue did not make up 100% of the Company’s services revenue; (4) Stem had overstated the benefits expected to flow from its AP partnership; and (5) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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