Gevo, Inc. (NASDAQ: GEVO)
Gevo is having an incredibly rough day in the market today. However, given the recent performance of the stock, massive declines are a big surprise. Is this something that investors should be worried about? Today, we’ll talk about why GEVO climbed in the market over the past few trading sessions, why we’re seeing declines today, and what we can expect to see from the stock moving forward.
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Why GEVO Recently Climbed In The Market
While today isn’t the best day in the market for the stock, Gevo recently more than doubled its value in a single trading session. So, what caused the gains? The answer is simple. GEVO is a company that is focused on creating bio-fuels and chemicals from renewable resources. One of the most interesting things the company has done, in my opinion, is creating a bio-fuel designed to power air planes. While it took a while for this fuel to lift off, we recently received big news surrounding it.
According to a recent announcement, Alaska Airlines has started to use the renewable jet fuel developed by GEVO. This is a massive step. After all, Alaska Airlines uses a massive amount of fuel. If even a small percentage of the fuel they use is from Gevo, the company will likely see incredibly strong revenue growth and great profits. So essentially, when the news hit, investors immediately saw big value, pushing the stock upward.
Why The Stock Is Falling Today
While we’ve seen some incredible gains from GEVO recently, that’s not exactly what we’re seeing in the market today. Unfortunately, the stock is declining today. Currently (10:02), it is trading at $0.74 per share after a loss of $0.22 per share, or 23.27%, thus far today. However, why are the declines happening?
It’s important to remember that price movements in the market tend to happen through a series of overreactions. When strong news hits the market with regard to a publicly-traded company, we tend to see a spike in the value of the stock associated with that company. However, in many cases, investors overreact, pushing the value of a stock too high, too fast. As a result, in the coming trading sessions, we generally see a correction that brings the value of the stock down to a more sustainable rate before growth can continue. It’s my opinion that this is exactly what’s happening with GEVO.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Gevo. The reality is that the company has been working hard to create renewable chemicals and bio fuels. At this point, it seems as though their work is finally paying off. The company developed a renewable jet fuel that is being used by a large airline. This will likely lift revenue and earnings, leading to big gains in the long run.
However, I don’t think Alaska Airlines is going to be the last bit of good news. The reality is that the way we view the burning of fossil fuels is changing, and chances are there will be tons of demand in the future for GEVO’s bio-jet fuel. This will likely lead to long-run gains for the company.
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What Do You Think?
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