Stem Opens Strategic Review as Shares Close at $3.01
Key Facts
Stem announced on October 26, 2026, that its board had begun a formal review of strategic alternatives aimed at maximizing shareholder value. The review opens the door to multiple options, including continuing to execute the company’s plan independently. Alternatives also include selling certain assets or the company, as well as a merger, refinancing or recapitalization. The company said the board is also considering other transactions, without limiting the process to any particular option. The announcement comes as the company pursues a separate path to regain compliance with New York Stock Exchange listing standards.
Stem appointed Guggenheim Securities as financial adviser to the review and retained Gibson Dunn and Davis Polk to provide legal advice. The board has not set a timeline for completing the process. The company also said there is no guarantee the review will result in a transaction or another strategic outcome. That leaves the options open to the board, with no announced deadline for a decision and no indication of which alternative it may prefer. Chief Executive Aaron Narayanan said the company’s priorities had not changed and that it continues to serve customers and execute its plan.
The background to second-quarter results presents a mixed picture of the company’s performance ahead of the review announcement. Revenue was $33.7 million, down 12% from $38.4 million in the same period of 2025. Stem attributed the decline to lower battery resale and managed services revenue. By contrast, software, services and edge revenue rose 1% to $33.4 million, compared with $32.9 million a year earlier. The company said growth in PowerTrack software revenue, which increased 11% year over year, supported that performance.
Stem reported a net loss of $14.4 million in the second quarter of 2026, compared with net income of $202.5 million in the same quarter a year earlier. The company attributed a significant part of the difference to a one-time gain from debt extinguishment in the second quarter of 2025. On an adjusted basis, earnings before interest, taxes, depreciation and amortization were $6.2 million, up 63% from $3.8 million a year earlier. Stem linked the improvement to a higher share of high-margin software and services revenue, as well as lower operating expenses. Operating cash flow also turned positive, at $0.3 million, after an outflow of $21.3 million in the same period of 2025.
The company announced on October 20 that it had received a letter from the New York Stock Exchange stating that it was not in compliance with continued listing standards. Stem said it must submit a business plan within 45 days of receiving the letter, explaining how it will regain compliance within 18 months. The exchange will review the plan and, if it accepts it, monitor implementation on a quarterly basis. Stem said the notice does not immediately affect the listing or trading of its common shares during the cure period, provided the plan is accepted and reviewed periodically and the company meets other listing requirements. The company’s shares, listed under the ticker STEM, closed at $3.01 on October 26, according to EL7 data.
Stem presents PowerTrack as part of its operating infrastructure, saying the platform supports more than 38 gigawatts of solar power and 1.8 gigawatt-hours of storage. It added that it has projects in 55 countries and that customers have relied on it for about 20 years. In the second-quarter results, Narayanan said the company was focused on operating leverage and strengthening its core platform. He added that Stem was working to build a foundation for accelerating growth in 2027 and beyond. These figures provide background to the board’s review, while the company has announced no change to its priorities or operating course alongside the process.
The next near-term milestone is the announcement of third-quarter 2026 results, scheduled for after the market closes on Thursday, November 5. Stem said it will hold an investor call at 5:00 p.m. Eastern Time that day. The date follows the receipt of the New York Stock Exchange notice and comes as the alternatives review remains without an announced timeline. The company is expected to present results for the period then, according to its statement. Stem has not set a later date to announce developments in the strategic review or resolve any of the options.