Gevo, Inc. (NASDAQ: GEVO) is having an overwhelmingly strong start to the trading session this morning as the stock recovers from the declines saw yesterday. Considering the massive declines yesterday, followed by the pop today, many are wondering whether or not now is the time to get involved. Today, we’ll talk about:
- Why the stock fell yesterday;
- why now may be a great time to get involved;
- what we’re seeing from GEVO; and
- what we’ll be watching for ahead.
Why GEVO Fell Yesterday
As mentioned above, Gevo had an incredibly rough day in the market yesterday, giving up more than 30% before the closing bell. The declines were ultimately the result of an SEC filing acting as a supplement to a prospectus dated August 2, 2017. In the filing, investors learned that GEVO now has the ability to offer up to $10 million in new shares at its discression. Of course, this led to concerns with regard to dilution, causing declines in the value of the stock.
Why Now May Be The Time To Get Involved
Dilution is never a good thing. However, chances are that the declines seen on GEVO yesterday were a door to opportunity opening. The reality is that while dilution proved to be a concern, the company has been the center of some incredibly positive news as of late. First and foremost, on June 12, 2018, the United States Environmental Protection Agency (EPA) approved isobutanol at 16% blends in gasoline for on-road use. Previously, isobutanol was only approved in blends up to 12.5%. That’s great news because the flagship product at GEVO is isobutanol. Thereofre, regulatory approval for higher percentage blends opens the door to revenue generating opportunities for the company.
Furthermore, another bit of good news came out yesterday. While the report was overshadowed by the SEC filing that caused declines, the news should not be ignored. Yesterday, GEVO announced that it entered into a supply agreement with Avfuel. Not only does this supply agreement mark the company’s first long-term agreement with one of the world’s leading suppliers of aviation fuel, Avfuel, it’s also likely to be a strong driver of revenue as Avfuel services more than 3,000 locations around the world.
What We’re Seeing From The Stock
With the tremendous declines yesterday, Gevo quickly entered oversold territory. As a result, investors and traders alike are seeing support for price growth in the charts. This, combined with the fact that there are very REAL REASONS to be excited about the future of GEVO, is leading to tremendous gains in the value of the stock this morning. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:14), GEVO is trading at $9.00 per share after a gain of $0.97 per share or 12.08% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on GEVO. In particular, we’re interested in following the story surrounding the company’s continued work in the renewable fuels space, and it’s a good space to be in at the moment. Right now, the world is looking to reduce its carbon footprint. This combined with the fact that the US EPA has approved stronger blends of isobutanol to gasoline and the fact that Gevo signed a long term supply agreements with a leader in aviation fuel supply, suggests that the company is headed for strong growth ahead. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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