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Why Energous Corporation Stock Soared Today

Evan Niu, CFA, The Motley Fool

What happened

Shares of Energous (NASDAQ: WATT) soared today, closing out the day with 15% gains, after the company completed an at-the-market equity offering. After fees and expenses, the company was able to raise $39 million in proceeds to help grow the business.

So what

Energous filed a prospectus earlier this month detailing the offering, which caused shares to drop at the time. That plunge followed an enormous jump in late December, when Energous secured FCC approval for its wireless charging product, which it later showcased at the Consumer Electronics Show.

Visualization of WattUp wirelessly charging electronic devices in a living room

WattUp hopes to charge all of your gadgets from afar. Image source: Energous.

While the initial reaction to the offering was negative, due to dilution concerns, shareholders may be realizing that the benefits of the offering far outweigh the costs. At-the-market offerings have several benefits, including minimizing market impact, lower costs, and greater flexibility when securing new capital.

Now what

The cash infusion will go a long way toward Energous commercializing WattUp, its promising long-range wireless charging technology. The company finished 2017 with just $12.8 million in cash and equivalents on the balance sheet, according to the prospectus. Revenue in the fourth quarter was just $30,000. Meanwhile, Energous incurred $13 million in operating expenses through the first three quarters of 2017 on $250,000 in sales, including $8.7 million in research and development spending.

"We have successfully executed a financing program that positions Energous well to capitalize on the significant market opportunity for our FCC-certified, WattUp charging-at-a-distance technology," CEO Stephen Rizzone said in a statement. "We chose this financing structure because it was the least dilutive, most efficient and cost-effective option that we evaluated. With a significantly strengthened balance sheet, we are now laser focused on executing the next phase of growth for Energous."

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.