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INVESTOR ALERT: Edelson Lechtzin LLP is Investigating Securities Fraud Claims Against Stem, Inc. f/k/a Star Peak Energy Transition Corp. (NYSE: STEM, STEM.WS)

NEWTOWN, PA, May 22, 2023 — The law firm of Edelson Lechtzin LLP is investigating securities fraud claims on behalf of all purchasers and acquirers of the securities of Stem, Inc. f/k/a Star Peak Energy Transition Corp. (NYSE: STEM, STEM.WS) pursuant or traceable to the offering documents issued in connection with the merger consummated on April 28, 2021, between the Company, STPK Merger Sub Corp. (“Merger Sub”), and Stem, Inc., a private Delaware corporation (“Legacy Stem”) between March 4, 2021, and February 16, 2023, inclusive (the “Class Period”).

Investors who purchased STEM securities may move the U.S. District Court for the Northern District of California to appoint them as lead plaintiff, no later than July 11, 2023. Current holders of STEM securities may pursue breach of fiduciary duty claims and corporate governance reforms. Please contact Edelson Lechtzin LLP at 844-696-7492 to discuss your investment losses, or by e-mail at [email protected]. A copy of the class action complaint can be viewed HERE.

The Securities Fraud Claims

Stem Inc. is a Delaware corporation that maintains its principal place of business in San Francisco, California. Originally known as Star Peak Energy Transition Corp. (“STPK”), a special purpose acquisition company or “SPAC,” on April 28, 2021, the Company consummated a merger with STPK Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of STPK (“Merger Sub”), and Stem, Inc. (“Legacy Stem”). The Merger was effected on the Closing Date through the merger of the Merger Sub with and into Legacy Stem, with Legacy Stem surviving as a wholly-owned subsidiary of the Company, which renamed itself “Stem, Inc.”

Throughout the Class Period, defendants made materially false and misleading statements or material omissions, including representations in its offering documents, regarding the Company’s business, operations, and compliance policies that: (i) Legacy Stem suffered from material weaknesses in internal controls over financial reporting related to accounting for deferred cost of goods sold and inventory, certain revenue recognition calculations, and internal-use capitalized software calculations; (ii) the Company had overstated Legacy Stem’s and its own post-merger business and financial prospects; (iii) Stem’s software revenue did not make up 100% of the Company’s services revenue; (iv) Stem had overstated the benefits expected to flow from its AP partnership.

In a filing with the SEC on March 15, 2021, the Company revealed that Legacy Stem had undisclosed material weaknesses in its internal controls over financial reporting. These weaknesses pertained to, inter alia, “accounting for…deferred cost of goods sold and inventory,” “the review of certain revenue recognition calculations,” and “the review of internal-use capitalized software calculations.” On this news, Stem’s stock price dropped.

On February 24, 2022, Stem reported its full year 2021 financial results. Among other items, they reported full year 2021 earnings per share of -$0.96, missing consensus estimates by $0.05, as well as full year 2021 revenue of $127.37 million, missing consensus estimates by $19.58 million. On this news, Stem’s stock price fell 21.62%, to close at $8.81 per share on February 25, 2022.

Then on January 5, 2023, Stem released an investor presentation in which it revealed that its 2022 bookings backlog was “partially offset by [a] Stem-initiated contract cancellation (~$130M) due to partner non-performance on [an] agreed timeline”. On this news, Stem’s stock price dropped 8.78%, closing at $7.79 per share.

On February 16, 2023, Stem reported its fourth quarter results and 2023 guidance, including quarterly revenue of $156 million, versus consensus estimates of $166 million, and issued disappointing full year 2023 revenue guidance of $550 million to $650 million, which was below estimates of $647 million. On this news, Stem’s stock price fell $1.44 per share, or 14.78%, to close at $8.30 per share on February 17, 2023. This represented a 69% decline from the Company’s initial post-merger closing stock price of $27.05 per share on April 29, 2021.

For more information, please contact:

Marc H. Edelson, Esq.
Eric Lechtzin, Esq.
411 S. State Street, Suite N-300
Newtown, PA 18940
Phone: 844-696-7492 or 215-867-2399 ext. 1
Email: [email protected]
Email: [email protected]

Edelson Lechtzin

Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving securities and investment fraud, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, employee benefit plans under ERISA, wage theft and unpaid overtime, consumer fraud, and dangerous and defective drugs and medical devices.

This press release may be considered Attorney Advertising in some jurisdictions. No class has been certified in this case, so you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. Your ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.

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