Small cap wireless charging stock Energous Corp (NASDAQ: WATT) had a spectacular IPO debut last Friday plus it rose another 39.41% today, meaning its worth taking a closer look at the stock along with the performance of a few other players in the wireless charger or charging niche like Qualcomm, Inc (NASDAQ: QCOM) and Energizer Holdings, Inc (NYSE: ENR). After all, wireless charging would eliminate the clutter of wires and charging devices surrounding everyone's desk, workspace or home. Moreover, a 2011 article in the Independent.co.uk quoted an analyst at IHS as saying the wireless charging market would rise from $123.9 million in 2010 to reach $885.8 million in 2011 and then grow exponentially in 2012 when revenue was expected to increase by 276%. By 2015, market growth was expected to ease to 48% as revenue from wireless charging devices hits the $23.7 billion level.
What Is Energous Corp?Small cap Energous Corporation is developing WattUp™ - a wire-free charging technology that will transform the way people charge and power their electronic devices at home, in the office, in the car and just about anywhere. Specifically, WattUp is a novel, patent- and trademark-pending solution that delivers intelligent, scalable power via the same radio bands as a Wi-Fi router. WattUp differs from current wire-free charging systems in that it allows users to roam and use their devices while charging resulting in a true wire-free experience that saves users from having to remember to plug in their devices or place them on a mat. Energous will initially license WattUp to the mobile accessory market, with an eye toward expanding to other markets over time.
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As for potential peers or competitors, large cap digital communications stock Qualcomm has developed a pair of wireless charging solutions - one for portable electronics and another for EVs; mid cap Energizer Holdings is also apparently a player in the sector (e.g. The Energizer Inductive Charger etc); plus (according to the Independent article) companies such as Powermat, PureEnergy and IDAPT also offer universal wireless chargers for all types of devices that are supposedly still less efficient than the jumble of cables and cords that most people rely on to keep their gadgets fully powered.
What You Need to Know or Be Warned About Energous CorpEnergous Corp priced its IPO at $6 a share to sell 4 million shares plus included a 45-day option for underwriters to buy up to an additional 600,000 shares for total potential gross proceeds of $27.6 million. Shares surged 76.33% to close at $10.58 on Friday.
However, Energous Corp is an unusual company as the San Jose Mercury noted that the company has gone public less than two years after being formed rather than go the usual route of seeking venture capital or private equity funding while Michael Leabman, the Chief Technology Officer, Director and Founder, has the following bio:
From September 2010 to September 2013, Mr. Leabman served as President of TruePath Wireless, a service provider and equipment provider in the broadband communications industry. Mr. Leabman has served on the board of directors of TruePath Holdings since 2010 and continues to serve on the board today. From 2008 to 2010, Mr. Leabman served as Chief Technology Officer for DataRunway Inc., a wireless communication company providing broadband internet to airlines. Mr. Leabman received both his Bachelor of Science degree and Master of Engineering degree in electrical engineering from the Massachusetts Institute of Technology. Mr. Leabman's extensive knowledge the Company, its technology and the consumer and commercial electronics industry position him well for service on our board of directors.
It should be mentioned that Energous Corp has not generated revenues since its inception (click here to see the latest prospectus) and has incurred net losses of $5,521,081 for the year ended December 31, 2013, $21,287 for the period October 30, 2012 (inception) through December 31, 2012, and $5,542,368 for the period October 30, 2012 (inception) through December 31, 2013. Last year, Energous Corp met its liquidity requirements principally through the private placement of convertible notes while at the end of the year, the company's cash on hand was $1,953,780 (Note: Debt holders are receiving roughly 1.8 million shares in the company in exchange for their notes plus 210,000 shares were sold to strategic partner Hanbit Electronics of Korea for $1 million earlier this month in a private placement).
Given the lack of revenue, roughly half the IPO funds raised will be used for research and development of the charging system with the rest rest targeted for sales and marketing, computer purchases and other administrative needs. The company hopes to have its first consumer products ready to show off at the 2015 CES, with sales coming in later in the year. Moreover and as of March 21, 2014, Energous Corp had 37 pending US patents and provisional patent applications and the company has identified more than 80 specific inventions it believes to be novel and patentable.
The prospectus also noted:
Our remote charging technology involves the transmission of power using RF energy waves, which are subject to regulation by the Federal Communications Commission ("FCC"), and may be subject to regulation by other federal, state and local agencies. To our knowledge, the transmission of power in this manner by a consumer product at the ranges we are proposing is novel. We believe our technology is safe, and we intend to demonstrate that to the FCC as soon as practicable.
Share Performance: Energous Corp vs. QCOM & ENROn Monday, small cap Energous Corp rose 39.41% to $14.75 (WATT has a 52 week trading range of $7.76 to $16.00 a share) for a market cap of $93.33 million plus here is a look at the long term performance of Qualcomm and Energizer Holdings:
As you can see from the above chart, both are up around 100% since the end of the financial crisis.
Finally, here are the latest technical charts for Qualcomm and Energizer Holdings:
The Bottom Line. Investors who aren't speculators may want to be cautious about investing in a recent IPO like Energous Corp that's also in the wireless charging business. After all, Energous Corp has only been around for two years - hardly enough time for management and its technology to prove themselves.
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