Binary bet on GWH (ESS Tech) with positive EV? (SWOTish analysis)

AI Summary

Author presents a high-risk binary long thesis on ESS Tech (GWH), arguing its iron flow battery technology and Arizona facility proof-of-concept could produce a 5-bagger despite significant cash, dilution, and competition risks.

GWH — LONG The author argues ESS Tech (GWH) is a high-risk binary long because its iron flow batteries use cheap materials and could become cheaper than lithium at scale, and a contract with an Arizona energy provider to build its biggest facility is a proof-of-concept that could lead to larger contracts. They see a new CEO potentially facilitating big-tech deals, while acknowledging the company is low on cash, likely to dilute, faces vanadium flow-battery competition with better round-trip efficiency, and has a 70% chance of failure. They estimate a successful outcome could be a 5-bagger on average, giving positive expected value.

However, I think if they are able to overcome that risk, it could be an easy 5-bagger (as an average). This poses a positive expected return.

Comments 1

▶ Full Post Text

The company ESS Tech, ticker GWH makes iron flow batteries. They seem to be the only company that has the resources & patents to make the type of battery with pretty much just saltwater and iron.   
  
**The product now:** is more expensive and takes up more space than lithium ion batteries, however lasts significantly longer. It  can't catch fire & doesn't have the same environmental concerns as lithium.

**The future product:** Has the potential to be cheaper than lithium ion per unit of energy storage, and has the potential to get cheaper, especially with scale. 

**Challenges as a company now:** They don't have much cash left, and are desperately looking 'between couch cushions' for cash to scale. They historically have raised money by diluting shares, and they will likely dilute in the future.

**Growth opportunity now:** They are trying scaling up, despite facing strong risks of failure. As they shift from shipping container sized storage to warehouse facilities, maintaining contracts will be a make or break. They have a contract with an Arizona energy provider to build their biggest facility to date. This seems to be a proof of concept, and if it works it would lead to further contracts with bigger facilities.   
They also have a new CEO, who I believe will try to facilitate deals with big-tech.

**Competition:** They are the only company with the patents to make flow state batteries without expensive materials, however other companies can make similar flow batteries with vanadium. While more expensive, the vanadium can easily be resold, so the lifetime costs are similar, yet the vanadium batteries are more efficient (80% round trip VS 70% round trip)

Realistically, there is an 7**0% chance they fail**. However, I think if they are able to overcome that risk, it could be an easy 5-bagger (as an average). This poses a positive expected return.

*Disclaimer: I have a small stake of a few hundred shares. This is obviously a high risk - questionable reward binary bet.*

Ideas

u/ZaneFreemanreddit Reddit r/investing

Binary long GWH: iron flow battery scale-up, 70% fail but 5-bagger potential

The author argues ESS Tech (GWH) is a high-risk binary long because its iron flow batteries use cheap materials and could become cheaper than lithium at scale, and a contract with an Arizona energy provider to build its biggest facility is a proof-of-concept that could lead to larger contracts. They see a new CEO potentially facilitating big-tech deals, while acknowledging the company is low on cash, likely to dilute, faces vanadium flow-battery competition with better round-trip efficiency, and has a 70% chance of failure. They estimate a successful outcome could be a 5-bagger on average, giving positive expected value.

▶ Full Post Text

Ideas

More from Reddit — r/investing