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Why Star Peak Energy Transition Stock Surged Today

By Howard Smith - Updated Feb 16, 2021 at 11:19AM

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The company's upcoming merger with an energy storage company is drawing attention with storm-related power outages dominating recent news.

What happened

Shares of Star Peak Energy Transition (STPK) jumped Tuesday morning after a severe winter storm caused power outages and electric-grid blackouts in the Midwest and South over the holiday weekend. 

Shares were 16% above Friday's closing price as of 11:45 a.m. EST today. 

So what

The special purpose acquisition company (SPAC) announced in December that it will merge with Stern, a smart energy-storage company. Energy companies are in focus today, as a severe winter storm has disrupted power grids, forcing rolling blackouts in Texas and outages elsewhere in the central U.S., amid record low temperatures. 

clean energy storage represented by wind, solar panels, and battery storage

Image source: Getty Images.

Now what

Stem uses artificial intelligence to optimize clean energy assets, and it supplies its customers with digitally connected storage networks. Stem's customers gain efficiency as their energy systems automatically switch among grid power, on-site generation, and battery storage. The company provides the integrated storage systems, and its software platform delivers recurring software-service revenue to Stem. 

There were more than 4 million customers without power in Texas due to the storm and extreme temperatures, according to data provided by poweroutage.us. The current predicament is highlighting the value of the services and energy storage systems Stem provides. 

The announced merger with Star Peak is expected to close by the end of March, and originally valued the combined company at $1.3 billion. Investors today should realize that at the current share price of $45, the newly combined company is being valued at almost $6 billion, and should perform due diligence before investing blindly. 

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