Gevo, Inc. (NASDAQ: GEVO)
Gevo has been one of my favorite stocks to watch as of late, and for good reason. The company is on the brink of something incredible. While the stock continues downward, I see every penny down as a larger opportunity. Today, we’ll talk about why the stock has seen recent declines, why I’m not concerned about these declines, and what I’m expecting to see from GEVO stock ahead. So, let’s get right to it…
Why GEVO Has Taken A Dive Recently
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Very recently, Gevo was headed upward. Excitement was building and investors wanted in. However, soon enough, the company launched a new public offering. In the announcement, investors learned that more than 28 million new shares would be sold in units that also included warrants. In return, the company hopes to raise $15.6 million. For more details with regard to the offering, click here.
Unfortunately, this sent GEVO on a complete reversal. After all, investors were concerned about dilution, which, thanks to a 90-day lockout period, wouldn’t happen for some time. Nonetheless, with new shares being issued, the piece of the pie gets a bit smaller for the investors who are already involved.
Why I’m Not Concerned
Tracking GEVO throughout the past week can be a relatively concerning process. However, I’m not concerned in the least. The truth is that I’ve been following the company for some time. I’ve also been lucky enough to have conversations with Pat Gruber, as well as key members of his investor relations team. In these conversations, I’ve learned some incredible things. I mean, think about what the company has accomplished in just the last year!
In the year 2016, a big lawsuit came to an end, Gevo signed an agreement with Musket, the first commercial flights were powered using the company’s fuel, the list goes on and on. However, in order to keep this going and push the company to profits, funds were needed for improvements to infrastructure.
At the end of the day, GEVO will reach profitability after scaling up. With that said, I expected that something big was happening to raise funds. In this case, that big action was the creation of a new public offering. While I understand the risks involved in dilution, at the end of the day, this is great news. Without the funding, the company would not have been able to scale up, and we would have been stuck in the same spot with investors wanting action and Pat trying to find a way to make it happen. However, the IPO gives the company the capital it needs in order to grow. So, if this is a cause for declines, bring it on. I’m all about the opportunity.
What I’m Expecting To See Moving Forward
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Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Gevo. Don’t get me wrong, I do believe that we’re going to see short-run volatility as the company goes through growing pains. However, in the long run, this stock is likely to run in a big way! Think about it – Alaska Airlines has said it would fly again, GEVO is set to start an agreement with a German airline, Musket is distributing isobutanol blends, iso-octane is becoming the next big wave of the future. All of these factors combined point to incredible growth as the company scales up and continues to bring in clients with an incredible product. All in all, I’m expecting gains ahead.
[Image Courtesy of Flickr]