Fluence Energy (NASDAQ: FLNC) saw its stock plummet 23.5% in after-hours trading on Wednesday, closing at $10.89, adding to a 9.2% decline during the regular session. The sharp sell-off came after the battery storage company revised its fiscal 2026 guidance downward, citing production setbacks at two factories.
Guidance Cut and Financial Impact
The company reduced its fiscal 2026 revenue midpoint by $400 million, now expecting $3.0 billion (range $2.9–$3.1 billion), down from the previous $3.4 billion midpoint. Adjusted EBITDA guidance was also slashed by $60 million, with the midpoint falling to negative $10 million from positive $50 million. Management attributed the cuts to delayed deliveries of $400 million, now expected to shift to fiscal 2027.
Record Backlog but Execution Challenges
Despite the negative outlook, Fluence reported an all-time high backlog of $6.4 billion, representing 2.1 times the midpoint of its revised revenue guidance. Third-quarter order intake surged to over $1.44 billion, nearly three times the prior year's figure. Data-center orders contributed approximately $850 million by the end of July. However, achieving the lowered revenue target still requires a massive fourth quarter, with a midpoint of $1.41 billion—35% higher than the year-ago period.
Margin Contraction and Profitability Concerns
The company's gross margin fell to 5.1% in Q3 FY2026 from 14.8% a year earlier, a decline of 9.7 percentage points. Net income swung to a loss of $44.3 million from a profit of $6.9 million, while adjusted EBITDA turned negative at $29.3 million versus positive $27.4 million. The margin compression erased approximately $63 million in gross profit compared to what last year's margin would have generated on current revenue, closely matching the EBITDA guidance cut.
Factory Issues and Working Capital Strain
CEO Julian Nebreda acknowledged that production levels "have been behind our expectation for this year," with full output anticipated by the start of fiscal 2027. CFO Ahmed Pasha noted that the delayed revenue remains in backlog. The company cited two separate factory issues: one with a global contract manufacturer and another at its new U.S. plant. Additionally, a scheduled battery supply deal will require $15 million in initial expenses. Inventory surged 72% from September to $783 million, while cash and equivalents dropped 51% to $339 million, with total liquidity at $863 million.
Analyst Sentiment and Market Reaction
Wall Street had been cautious ahead of the release, with 13 of 24 firms tracked by FactSet rating the stock as Hold. The average price target stood at $19.05, about 75% above the after-hours price, though these estimates are likely to be revised. The stock had risen 5.6% over the previous five sessions before Wednesday's drop.
Risks and Upcoming Catalysts
Key risks include additional factory delays, margin softness, and working-capital pressure. Uncertainty from customer postponements, tariffs, and policy changes also weigh on the outlook. Management will address the market on Thursday at 8:30 a.m. EDT, with investors seeking clarity on factory timelines, margin improvements, and fiscal 2027 conversion progress.
