Renewable energy stocks look headed for a second day of declines, with Gevo (NASDAQ:GEVO) down almost 12% in pre-market trading on Thursday. GEVO stock has had a spectacular run so far in 2021, rising more than 230%.
Renewables took flack — albeit without any basis in truth — in the blame game going on in Texas amid the weather-related electricity crisis. Republican Gov. Greg Abbott and several of his predecessors falsely claimed that renewables are responsible for the mess that has shut down much of the state. Abbott appeared on Fox News yesterday to talk about the disaster. There, he mocked the Green New Deal, a progressive plan that proposes sizeable investment in renewable energy.
Gevo develops bio-based alternatives to petroleum-based products via biotechnology and classical chemistry. The Colorado company converts renewable raw materials into isobutanol and renewable hydrocarbons that it says can be directly dropped into existing fuel and chemical products. It says that its three critical pieces of technology are key differentiators between it and other biofuel technology companies.
GEVO Stock Gained on Biden Expectations
GEVO stock gained in recent weeks around the inauguration of President Joe Biden. The rise of the Democrat heralded a new era for alt-fuels, many believe. Among the advisors guiding the new White House policy is Gevo co-founder and the first woman to be awarded the Nobel Prize in Chemistry, Frances Arnold, who was named co-chair of the President’s Council of Advisors on Science and Technology.
The Department of Energy’s Office of Fossil Energy also announced plans to make $160 million in federal funding available to help recalibrate the country’s broad fossil-fuel and power infrastructure for decarbonized energy and commodity production. That funding will be used to develop technologies for the production, transportation, storage and utilization of fossil-based hydrogen, with progress toward net-zero-carbon emissions.
Still, analysts don’t have much faith in the company’s ability to make a profit. As InvestorPlace’s Chris Markoch pointed out in his recent article on GEVO stock, the company has had a checkered history. He referred to a 2017 Forbes article which even at that time showed that GEVO stock had a terrible track record.
Barron’s recently put Gevo on a list of stocks over $500 million in market value that are speculative gambles. Their trading volume compared to their market cap indicate that most buyers are essentially gambling in the stock.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.