GEVO Stock: Gevo Rockets as Political Tides Change

Gevo Inc (NASDAQ: GEVO) is screaming for the top in the market this morning after announcing that it will participate in the Water Tower Research Fireside Chat Series. While that is exciting news, there’s far more exciting news in the future for the company. Here’s what’s going on:

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Gevo to Take Part in the Water Tower Research Fireside Chat Series

In the press release, GEVO announced that its CEO, Dr. Patrick Gruber, will participate in the Water Tower Research Fireside Chat Series. The CEO’s participation will take place on Thursday, January 21 at 3:00 pm EST. 

In the release, Gevo explained that Dr. Gruber will be chatting about the concept of Net-Zero Projects to produce energy-dense liquid hydrocarbons using renewable energy and the company’s proprietary technology. 

The idea here is to convert renewable energy from a variety of sources into energy-dense liquid hydrocarbons. These hydrocarbons can then be burned in traditional engines with the potential to achieve net-zero greenhouse emissions across the whole lifecycle of the fuel. 

The Bigger Story Starts Tomorrow

Sure, the fireside chat is exciting news, however, it all ties into a bigger story that will start tomorrow. You see, the world has been working to move toward clean energy, rather than taking advantage of energy sources that are leading to a negative environmental impact. 

With that said, tomorrow, Joe Biden will be inaugurated as the President of the United States. So, what does this have to do with GEVO? Well, the real question is what it doesn’t have to do with the company. 

The fact of the matter is that Joe Biden has been a strong proponent of the clean energy movement for quite some time now. With his views toward clean energy, we know that he will be re-joining the Paris Climate Accord. Moreover, he is likely to push for legislation changes in the United States to move toward clean energy. 

Importantly, Biden isn’t the only democrat with these views that will be working to shift legislation. Keep in mind, democrats also won control over Congress and the Senate in the 2020 election season. 

As a result, there’s a strong chance that anything President Biden wants to push through, will make it through the legislative process seamlessly. 

As such, I’m expecting to see the following take place relatively soon:

  • Tax Cuts. First and foremost, companies actively working to develop, market, and sell clean energy solutions will likely benefit from tax cuts. As such, GEVO will likely enjoy a reduced tax burden, helping to bolster the company’s balance sheet. 
  • More Tax Cuts. On top of the tax cuts provided to businesses, I’m expecting that more tax cuts will come down the line, specifically for consumers that use clean energy products. As a result, demand for the fuels developed, marketed, and sold by Gevo will likely be met with incredibly high demand, boosting sales and further benefiting the company and its investors. 
  • Grant Funding. Finally, I’m expecting that grants will be made available to companies that are researching ways to go green. As a result, GEVO is likely to benefit from grant funding that will largely cover the cost of expanding the company’s research and improving its productivity. 

The bottom line here is simple. With democrats taking control over Washington D.C. tomorrow, big changes in the energy space are likely to take place, and these changes will be overwhelmingly positive for GEVO. 

What Analysts Think About GEVO Stock

According to TipRanks, analysts love GEVO stock. In fact, at the moment, there are two analysts on Wall Street that cover the stock, both of which rate it a buy. 

Price targets on the stock range from $5 per share to $8.50 per share, with a median target of $6.63. However, it’s important to note that the price targets on the stock were set prior to the 2020 election season. With Biden taking the White House and the democrats taking control over Congress and the Senate, I’m expecting blue skies ahead for the company which is likely to compel analysts to raise their price targets. 

Importantly, it’s never a good idea to blindly follow the opinions of analysts, or any expert for that matter, but it is a good idea to use these opinions to validate your own. 

Risks to Consider Before Buying GEVO Stock

When investing, you must accept risk. It’s all part of the game. GEVO stock is no exception to that rule. Before investing, you should consider the following risks:

  • Speculation. Gevo is a clean energy company that is working to market new fuels developed with new technologies. With Biden as President and democrat control over Congress and Senate, there’s a strong argument that demand will climb for the company’s products. However, this is an argument outlining expectations for the future. Because nobody can see the future, the idea is one built on speculation, which could be a risky concept. 
  • Penny Stock Risks. As a penny stock, GEVO is known to experience high levels of volatility. This makes entrance and exit decisions difficult to make and increases the risk of significant short-term declines should negative news be released. 
  • Profitability. Finally, Gevo does generate revenue through the sale of its clean fuels. However, one thing it’s not generating is a profit. With a lack of profitability, the company will need to survive on the money it has in the bank. If it’s unable to do so, it may look to raise funds through the sale of newly issued shares, which could result in significant declines as a result of dilution of existing shareholder value. 

Final Thoughts

Before I give my final word here, I want to make one thing clear. I couldn’t be more bullish when it comes to GEVO stock. The risk section above wasn’t designed to scare you off. However, as an investor, it’s important that you understand everything associated with your investments, even the risks involved. 

With that said, if there has ever been a time to invest in Gevo, now is it. The company has spent several years curating a process to develop clean fuels. As a result, it has the ability to produce these fuels and at mass capacity. That’s important in a time when a change in US leadership will likely lead to a push toward clean energy around the world. 

The bottom line here is simple. Tomorrow, when Democrats have complete control over the United States legislative process, the tides will likely change for the company and others in the clean energy space. All in all, if you’re not paying attention to GEVO yet, you’re likely missing out.