When Energous (NASDAQ:WATT) went public five years ago, it turned heads with its development of wireless charging pads that could charge devices from 15 feet away. These pads, the bulls claimed, would eliminate bundles of messy wires and power strips behind TVs, PCs, lights, and other devices.

That enthusiasm lifted Energous' stock from its IPO price of $6 to the low $20s in early 2018. But the bulls retreated over the past year after a series of mishaps, and the stock now trades at about $5. Let's look back at what happened to Energous, and whether or not its stock will ever recover.

Devices being wirelessly charged in a kitchen.

Image source: Energous.

The rise and fall of Energous

The future initially looked bright for Energous. The FCC approved a lower-power version of its WattUp charging tech for IoT devices in 2016, and it secured a manufacturing deal with Dialog Semiconductor (OTC:DLGN.F) to produce a wireless charging chip in 2017.

Dialog was an Apple (NASDAQ:AAPL) supplier, so some analysts suggested that Energous' wireless charging chip would be installed in Apple's new iPhones. Unfortunately, Apple decided to use a similar wireless charging chip from Broadcom (NASDAQ:AVGO), which used Integrated Device Technology's Qi wireless charging standard.

Apple then dramatically reduced its chip orders from Dialog, and ultimately acquired part of its business to strengthen its in-house chip development efforts. That doused any remaining hopes that Energous would join Apple's supply chain.

In late 2017, Energous' rival Powercast won FCC approval for its over-the-air, far-field charger, which could remotely charge consumer devices from 80 feet away. Prolific short seller Citron Research subsequently slammed Energous for a "history of deception" and claimed that its technology wasn't "ready for primetime."

Last January, Energous' founder, SVP, and chief technology officer Michael Leabman resigned. That same month, Energous raised $39 million by selling 2.2 million shares. It filed for a $75 million mixed shelf offering to raise more cash last August, and it sold another 3.3 million shares for $25 million earlier this year.

Can Energous even survive?

Those secondary offerings were necessary because Energous only generated $515,000 in revenues in 2018 -- with all of its sales coming from manufacturing partnership payments instead of product sales -- and posted a whopping net loss of $50.8 million.

In the first quarter of 2019, it generated just $66,500 in revenue, with a net loss of $11 million. It finished the quarter with $36.1 million in cash and equivalents, which mostly came from its stock offerings, and no debt. Based on those figures, Energous trades at a whopping 275 times trailing sales -- so its stock could easily plummet to penny stock levels.

Devices being wirelessly charged in an office.

Image source: Energous.

However, Energous believes that the recent FCC approval of its first commercial product, its WattUp-enabled personal sound amplification products (PSAPs) from Delight, will generate a new stream of sustainable sales growth. PSAPs amplify sounds like hearing aids, but they're cheaper and aren't medically certified like official hearing aids.

It's unclear how much revenue the PSAPs will generate for Energous, but any meaningful product revenue would be welcome at this point. Energous also secured new patents for wireless power transmitters and a charging system for gaming controllers last year, and it partnered with the Chinese company IDT International Limited (not to be confused with Integrated Device Technology) to produce a near-field wireless charging transmitter.

I'm not accusing Energous of misleading investors, but its deal with IDT likely caused investors to conflate the tiny Chinese company with the larger Silicon Valley-based company, which was recently acquired by Japanese chipmaker Renesas Electronics (OTC:RNECY). The bigger IDT could render Energous obsolete with its Qi wireless charging standard, so publicizing a "partnership" with the Chinese IDT smells fishy.

Some investors are bullish... but I'm not

Roth analyst William Gibson recently claimed that Energous' WattUp royalties would "begin to ramp" in 2020 and that its cash flow would turn positive by the third quarter of this year.

I respectfully disagree. Energous' pattern of overpromising and underdelivering, its secondary offerings, the departure of its founder, and questionable "partnerships" all raise red flags. It faces tough competitors in the near-field and far-field charging markets, and it should have already been acquired if its WattUp technology was truly a game-changer. Therefore, investors should avoid Energous and stick with Broadcom or Renesas as their long-term plays on wireless charging instead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.