Why Are WATT Shares Down Today?

• As per the financial research firm, Energous has not demonstrated a self-sustaining operating model, instead relying on equity sales to fund operations.
• It noted that Energous has used various equity actions to raise cash 21 times since 2019. 
• The firm also raised doubts on the company’s governance structure, noting that the company’s CEO Mallorie Burak also serves as its CFO.

Shares of Energous Corporation (WATT) closed 4% lower on Tuesday after Fugazi Research termed it a business funded by dilution.  

“After more than a decade, WATT has not built a business that funds itself—it has built one that funds itself through shareholders,” Fugazi said while adding that continued dilution is not a risk but the model with the company.

As per the financial research firm, Energous has not demonstrated a self-sustaining operating model, instead relying on equity sales to fund operations. It noted that Energous has used various equity actions to raise cash 21 times since 2019.

The company is “uninvestable and will likely turn shareholders into bagholders, with shares likely to revisit single-digit pricing,” Fugazi alleged. “WATT has burned through enormous amounts of capital with little to show for it.”

Other Concerns

The firm also raised doubts on the company’s governance structure, noting that the company’s CEO Mallorie Burak also serves as its CFO. It also noted that the company’s board has only four members including the CEO, raising questions about board oversight.

Burak, Fugazi alleged, has a history of working at companies that ultimately fail, highlighting her past experience with Knightscope Inc and Thin Film Electronics.

Energous Corporation develops, manufactures, and sells over-the-air (OTA) radio frequency (RF) wireless power technologies and networking solutions for low-energy devices and sensor tags for supply chain applications. Culper on Tuesday also alleged that Energous’ product line ranks poorly against its competitors.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around WATT stayed within the ‘extremely bullish’ territory over the past 24 hours, while message volume remained at ‘extremely high’ levels.

WATT stock has more than doubled over the past 12 months. 

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