Gevo (NASDAQ:GEVO) is a Colorado-based renewable jet fuel company. The company is building a huge green plant in South Dakota to make fuels from non-carbon sources. The problem is the plant won’t be online and producing cash flow until 2024. However, GEVO stock could get a boost with the announcement of the start-up of sales in the first quarter.
GEVO expects to make jet fuel out of plants, not oil. Gevo, Inc. has a strategic alliance with Axens North America, Inc. for ethanol-to-jet technology and sustainable aviation fuel commercial project development. Once its plant is online, it hopes to sell significant amounts of this jet fuel. But so far the plant is still in construction.
On March 25 Delta Air Lines (NYSE:DAL) signed an agreement with Gevo. It signed a “take-or-pay” agreement with Delta to supply 75 million gallons of sustainable aviation fuel (SAF) per year for seven years.
In addition, earlier in the fall of 2021, Chevron (NYSE:CVX) signed a deal to jointly invest in building and operating one or more facilities that would process corn to produce sustainable aviation fuel. Chevron would also have the right to offtake about 150 million gallons per year from the plant.
Reuters also reported that the President Joe Biden administration is discussing plans to require a target date of 2050 for weaning aircraft off fossil fuels.
The Effect on GEVO Stock
As a result, GEVO stock has moved higher recently. For example, from its recent low of $2.92 on Jan. 27, GEVO stock is up to $4.33 as of Monday, April 8. On Feb. 24, Gevo said it expects to generate biogas revenues starting in Q2 2022. It will also sell renewable energy credits in the second half of 2022.
Moreover, it reported restricted cash and marketable securities of $475.8 million compared to $522.4 as of the end Q3 2021. So its cash bleed was just $46.6 million in the quarter. If revenues start up soon, this could ameliorate its cash burn going forward. That could give GEVO stock a boost going forward and investors might find the company worth investing in on a long-term basis at that time.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.