Gevo, Inc. (NASDAQ: GEVO)
I’ve been receiving several messages from friends at Stock Twits asking when I was going to speak with Gevo in another interview. While I have reached out to the company several times, I have not received a response. Unfortunately, the company has gone silent. Outlining one of two primary issues that the stock is facing today. Nonetheless, yesterday, the company announced yet another public offering, outlining the second issue, and causing the stock to fall dramatically. Today, we’ll discuss the two big issues with GEVO, what we’re seeing from the stock today, and what we’ll be watching for ahead.
The First Problem I See With GEVO
The biggest issue that I see with regard to Gevo, Inc revolves around the company’s communication with investors. Previously, I tried to open this door of communication by doing interviews, asking investors for questions, and making sure they were covered. However, as of late, this door has been closed. I’m not quite sure as to why, but I can’t seem to get in touch with the company for another interview.
The problem, however, isn’t that GEVO won’t respond to CNA Finance requests for interviews; the problem is bigger than that. Let’s face it, I love what I’ve built here, but there are other ways to communicate with investors. Press releases, social connections, and email are just a few. Unfortunately, the company seems to be foregoing communication with its investors, and that in itself is a major concern. Essentially, it’s like GEVO wants investors to take the little information they receive from the company at face value without asking questions. Unfortunately, the world of investing just doesn’t work that way.
The Second Issue The Company Faces
The truth is that Gevo needs money in order to do everything it wants to do. Of course, there are several ways to go about raising funds. However, the favorite among management at the company seems to be to take advantage of investors by diluting the stock. In fact, they did so just yesterday after hours.
In after hours yesterday, GEVO announced yet another proposed public offering of common stock and warrants. The company said it plans to use the money to pay down part of the outstanding debts as well us use the remainder as working capital.
So, what size is the offering? How much dilution will we see? Well, in true GEVO fashion, that question is yet to be answered. The company announced the offering but failed to specify the size of the offering, pointing to the issue mentioned above.
What We’re Seeing From The Stock
At this point, it’s clear that investors are tired of the dilution. When Gevo, Inc needs money, they reach into investor pockets, and investors just aren’t having that anymore. As a result of the offering, the stock fell dramatically. In fact, at the moment (12:23), GEVO is trading at $1.60 per share after a loss of $0.73 per share (31.33%) thus far today.
The truth is that I love the product that Gevo has amassed. It’s a much needed product, given the environmental concerns of today. Not to mention, the company is much further along than much of its competition. However, a product can only get a company so far. Throughout the past year, GEVO has concerned investors with their inability to communicate. On top of that, the company has diluted the stock in a big way! At this point, investors aren’t sure what to expect, and with the company’s eerie silence, they’re starting to expect the worst!
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