Volume at last, margin not yet

Eos Energy Enterprises, an Edison, New Jersey maker of zinc-based Znyth battery systems for utilities and grid developers, spent five years promising it could manufacture at scale. In the June quarter it did. Revenue reached $68.8m, more than triple the year-earlier figure and up a fifth sequentially. First-half sales alone beat all of 2025, which totaled $114.2m.

Every one of those batteries left the factory at a loss. Eos booked a gross loss of $48.8m on that revenue, an adjusted gross margin of about -62%, though that improved seven points from the March quarter. Management's stated aim is a positive adjusted gross margin by the first quarter of 2027 — the single number that determines whether volume is a business or an expense.

Backlog is a record $807m, roughly 3.4 gigawatt-hours, with six customers ordering in the quarter and four of them new. Sitting behind it is an opportunity pipeline of $24.6bn, some thirty times the signed book, of which 32% is described as data-center related. On the 7 August call management said on-site qualification work with co-location customers is still ongoing and there are no firm data-center contracts yet. The named wins are elsewhere: a Golden Dome prototype contract with the US Department of War, a 750-megawatt-hour supply agreement with CAPAC in German-speaking Europe, and a $100m purchase order from Frontier Power USA for the first phase of the Blanquilla project in Texas. Roughly 80% of second-quarter revenue came from a pre-existing Frontier Power project in which Eos itself holds a 36% stake.

The multiple fell; the revenue rose

That is the divergence. Trailing revenue has gone from $114m to $214m over the past year, and the price paid per dollar of it has gone from about 27x in February to about 12.8x in May to 5.15x today, 3.57x on forward estimates. An 81% compression in six months, against a tripling business. Earnings multiples say nothing here: the $275.7m net loss dwarfs the $83.8m operating loss, the gap being non-cash marks on convertible notes and warrants.

The funding arithmetic explains part of the discount. Cash stood at $364m with operating burn tracking the adjusted loss, full-year guidance was tightened to $300-350m, and diluted shares rose from 237.7m to 339.8m in a year — 43% dilution, from the same converts and warrants that distort the loss line.

Demand is not what broke

US developers plan to bring roughly 24 gigawatts of utility-scale battery storage online in 2026, against a record 15 gigawatts last year, with over half of it in Texas. Policy tightened rather than reversed: standalone storage keeps the 30% investment tax credit into the next decade, but projects starting construction this year must now clear a 55% domestic-cost threshold and prove physical work rather than a deposit. That favors Eos, whose Pittsburgh-built units run about 91% domestic content, over imported lithium racks.

The past month's selling was mostly interest rates. Most of the decline across listed battery makers landed in four sessions from 17 August, when the 30-year Treasury yield topped 5.3%, a 19-year high. The two hardest-hit names have no data-center content whatsoever: Enovix, a Fremont, California cell developer selling into smartphones and eyewear, fell 22% in that window after CEO Raj Talluri resigned effective 13 August and Bank of America cut its target to $5 from $8. Enovix grew revenue 21% to $9.0m last quarter, a sharp deceleration, and trades at 20.6x trailing sales. Eos fell 6.3% over the same four days.

EnerSys, the profitable Pennsylvania incumbent in telecom and data-center backup power, fell 6.8%. Its June quarter showed gross margin of 33.5% against a five-year band of 27-30%, flattered by a one-off $31m tariff refund; its fastest-growing segment was aerospace and defense, up 24%, not the energy-systems unit that houses data centers, up 9%. It trades at 19.9x trailing and 14.4x forward earnings.

The setup

Where it stands — Eos is shipping at record volume and record backlog while every unit still ships below cost. Would confirm — Adjusted gross margin turns positive by the first quarter of 2027, as management has guided. Would invalidate — A firm data-center contract fails to appear while the 2026 revenue guide slips below $300m. Watch next — Third-quarter results, due early November, and whether backlog exceeds $807m. Valuation — 5.15x trailing sales and 3.57x forward, against roughly 12.8x in May and 27x in February.