Gevo Inc (NASDAQ: GEVO) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced a new agreement that will drive strong revenue.
Of course, the news excited investors, pushing the stock for the top. Today, we’ll talk about:
- The new agreement;
- what we’re seeing from GEVO stock as a result; and
- what we’ll be watching for ahead.
GEVO Announces New Agreement
As mentioned above, Gevo is having a strong day in the market today after announcing a new agreement. The agreement was announced early this morning via press release.
In the release, GEVO said that it entered into a long-term, definitive, binding and bankable renewable isooctane purchase and sale agreement. The agreement was dated February 21, 2019.
According to the agreement, HCS Group will be supplied exclusively for sales of the companys renewable isooctane into high-end applications ranging from high purity solvents to specialty fuels. However, the contract forbids the use of isooctane for on-road transportation fuels.
In the release, GEVO said that the purchase agreement is an important step forward in its strategy.
According to the terms of the agremeent, the company will supply low-carbon, renewable isooctane to HSC over ten years if certain conditions are met. These conditions incclude the expansion of the company’s production capabilities at its advancedbiofuels production facility in Luverne.
In a statement Patrick R. Gruber, CEO at GEVO, had the following to offer:
This is a game-changing, bankable agreement for Gevo and another step forward to delivering on our promise to address the need for low-carbon fuels while also meeting sustainability requirements for our customers, to reduce their carbon foot print. This agreement strengthens our partnership with HCS Group that began with a prior agreement signed in 2017. Our technology and our renewable isooctane have proven themselves in highly demanding niche applications. We now want to scale substantially in order to enable rolling-out our renewable isooctane to a variety of high-end fuel and solvent applications.
The above statement was followed up by Dr. Uwe Nickel, CEO at HCS Group. Here’s what he had to offer:
We have been impressed with the quality and the consistency of Gevo’s renewable isooctane, proving its value in the most demanding, high-end race fuel applications This long-term agreement and the capacity expansion enables us to satisfy growing demand for our sustainable ECO products in mass markets driven by global, blue-chip accounts. We see strong interest for our advanced bio-based products in the outdoor power equipment and the cosmetics industries as well as in a wider range of fuel applications.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comest to Gevo, the news proved to be overwhelmingly positive.
This agreement means that when the company builds its Luverne facility to full capacity, it’s got a customer that’s ready and willing to pay for the isooctane produced. So, it’s not surprising to see that excited investors are pushing the stock up.
As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:52), GEVO is trading at $3.26 per share after a gain of $0.74 per share or 29.37% 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, were interested in following the story surrounding the company’s continued work to expand production at Luverne and the revenue that this contract generates once that happens. Nonetheless, we’ll keep a close eye on the news and bring it to you as it breaks!
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