Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Eos Energy Enterprises Plunged 21.6% on Thursday

By Travis Hoium - Updated Jan 14, 2021 at 5:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A short-seller's report took a bite out of the stock today.

What happened 

Shares of Eos Energy Enterprises (EOSE 3.57%) plunged as much as 21.6% in trading Thursday after a short-seller report came out. Shares closed down 13.6% on the day. 

So what

Iceberg Research released a report headlined "Fake Customers Won't Recharge a Dead Battery." It accuses Eos of having a questionably large order book that grew right before its merger with a special purpose acquisition company (SPAC). 

Energy storage assets in front of a wind farm.

Image source: Getty Images.

It also raises technical questions about the company's zinc-based battery technology that has worse efficiency than traditional lithium-ion batteries. Based on Iceberg's analysis, the stock has a 90% downside from its current price.

Now what

Short-sellers have a motivation behind releasing reports like this: They want to get their investment thesis out and begin to push the stock lower. That's exactly what has happened today. 

Some of the points brought up in the report are valid, but it'll take time for either a bullish or bearish thesis to play out for this renewable energy stock. I wouldn't sell on this report alone, but keep in mind the short thesis if you own this stock because understanding both sides of an investment is important for investors. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eos Energy Enterprises, Inc. Stock Quote
Eos Energy Enterprises, Inc.
EOSE
$1.16 (3.57%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.