Fluence Energy has gotten torched over the last six months - since December 2024, its stock price has dropped 74.4% to $4.74 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Fluence Energy, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Fluence Energy Not Exciting?
Even though the stock has become cheaper, we're swiping left on Fluence Energy for now. Here are three reasons why FLNC doesn't excite us and a stock we'd rather own.
1. Low Gross Margin Reveals Weak Structural Profitability
All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.
Fluence Energy has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 6.4% gross margin over the last five years. That means Fluence Energy paid its suppliers a lot of money ($93.60 for every $100 in revenue) to run its business. 
2. Free Cash Flow Margin Dropping
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Fluence Energy’s margin dropped by 12 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business. Fluence Energy’s free cash flow margin for the trailing 12 months was negative 12.5%.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Fluence Energy burned through $292.2 million of cash over the last year. With $587.3 million of cash on its balance sheet, the company has around 24 months of runway left (assuming its $396.6 million of debt isn’t due right away).
Unless the Fluence Energy’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Fluence Energy until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
Fluence Energy isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 11.6× forward P/E (or $4.74 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at the most entrenched endpoint security platform on the market.
Stocks We Would Buy Instead of Fluence Energy
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
