Is Energous' IPO Pop Sustainable?

| About: Energous Corp. (WATT)


Energous saw a highly successful IPO on the NASDAQ today despite no revenue.

Its remote charging technology is potentially game-changing.

Can they capitalize and reward these eager early stage investors?

As of March 28th, 2014, Energous (NASDAQ:WATT) is America's newest publicly traded company. The shares, which were offered at $6 saw a surge to over $9.50 during trading. The company, founded just two years ago, has had a remarkably quick IPO turnaround, thanks to the strength of its proprietary technology and its partnership with MDB Capital Group, which bills itself as "Wall Street's only IP-focused bank" and forms long-term partnerships with companies that possess patentable disruptive technology.

So what, might you ask, does Energous have to offer the tech world? Founded by Dr. Michael Liebman, who has a diverse background in both the scientific community and the business world, Energous' technology allows mobile devices to charge using WiFi. If commercialized, this would mean no more fighting over outlets at the airport, no more battery-level anxiety and no more awkwardly asking restaurant staff and dinner party hosts if they have a spare charge. Developed in-house, the technology is slated for commercialization in 2015.

The company currently has yet to produce revenue, but has found a strong strategic partner in Hanbit Electronics, a South Korean consumer electronics manufacturer which is heavily involved in the wireless router space. Hanbit has made a $1 million investment in Energous and it is the beginning of a series of potential licensees for the technology, which includes manufacturers of wireless routers, semiconductors , battery packs and handsets, as well as retailers. The company hopes to have technology available at the consumer level in North America by 2015, stressing that while many strategic partner companies are based in Asia, its consumer strategy is focused closer to home.

According to discussions with management, the company seeks to create demand pull on the consumer side through advertising as well as strategic partnerships with operators at various stages of the manufacturing and distribution chain of WiFi and mobile devices.

The company, as well as today's market participants, have reacted enthusiastically to what they see as a true game-changing technology. From the perspective of any mobile device user, this is certainly understandable. It explains the rapid transition from a family and friends funded entity in 2012, to a private convertible note offering in May 2013 to a successful IPO today.

According to the company's SEC registration statement, the total liabilities were a manageable but non-trivial $7.7 million. The company's progress in licensing should be monitored closely as the pre-revenue stock will likely move sharply on news. But any aggressive tech investor should certainly take a look at such strong IP.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article was written by Daniel Fridson, an analyst at Real Assets Research. He has no positions in the stock and no business relationship with the company.