Gevo, Inc. (NASDAQ: GEVO) has been an interesting stock to watch as of late. Recently, with the announcement of EPA news, the stock saw some pretty dramatic gains. However, shortly after the news broke, an SEC filing led to some concerns. Now, we’re seeing tremendous volatility as the stock bounces from incredible gains to incredible losses. Today, the stock is trading down, but should you buy the dip? Below, we’ll talk about:
- The recent news that we’ve seen out of GEVO;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Recent News Surrounding GEVO Has Been Positive For The Most Part
As mentioned above, Gevo has been the center of attention as of late, with massive movements in both directions. So, what’s the deal? What news is causing such movement? Well, it all started with a ruling from the United States Environmental Protection Agency. Recently, the EPA ruled that isobutanol could be used in gasoline blends up to 16% for on-road use. Previously, the maximum amount of isobutanol allowed in gasoline blends was 12.5%. Considering that isobutanol is Gevo’s flagship product, this news proved to excite investors.
Shortly after seeing gains in multiples on the EPA news, GEVO dropped a bomb that concerned investors. In an SEC filing, the company said that it may, at its discretion, issue up to $10 million in new shares. Unfortunately, this means that dilution could be headed this way, which upset investors and caused the stock to go on a downward trend.
In the most recent news, GEVO announced that it entered into an agreement with Avfuel, a massive company in the aviation fuel space. The agreement surrounded the supply of Gevo’s ATJ fuel to the company and represented the first long-term supply agreement that Gevo had entered into surrounding its jet fuel. Considering that Avfuel services more than 3,000 locations around the world, this is a very big deal!
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of GEVO, there has been quite a bit of news as of late, leading to massive swings in value. After gaining more than 18% by the closing bell yesterday, the stock is down big in the pre-market hours, providing what we believe to be a discount to get in on long-run gains at a decent price. Of course, our partners at Trade Ideas were the first to alert us to today’s declines. Currently (8:02), GEVO is trading at $8.98 per share after a loss of $1.00 per share (10.02%) 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 how the company plans on taking advantage of increased isobutanol blend limits for on-road use as well as the revenue generated through the supply agreement with Avfuel. While there is the matter of potential dilution ahead, we believe that the positive news surrounding GEVO far outweighs the negative, making this a potentially profitable buying opportunity!
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