May. 7 at 3:27 PM
$STEM A few days ago, I posted that cash flow would be one of the most important metrics this earnings report, and it came in even worse than I expected. Especially when you consider that their senior notes increased by nearly
$5.5 million. To me, that suggests they didn’t fully pay the interest in cash, but instead partly paid it in kind (PIK).
I genuinely like the turnaround story, the product, and the company’s Powertrack growth trajectory. My concern is that none of it can be viewed in isolation from the debt burden.
As @TraderJay50 said earlier: “This is a textbook case of good assets trapped in a bad capital structure.” And that’s really the key issue. We did both agree that a debt-free STEM would be a fundamentally different company.
The big question is: how do they get there from here?
Let’s see what the upcoming quarters bring.
