Renewable fuel firm Gevo (NASDAQ:GEVO) closed up today as part of a broader rally taking over the market. Indeed, GEVO stock gained nearly 7% on a variety of promising news items for the company.
So, what do you need to know about Gevo today?
Well, today a number of basic materials companies are soaring, including Gevo. This includes the likes of Lake Resources (OTCMKTS:LLKKF) and American Vanguard (NYSE:AVD), both of which gained more than 6%.
It isn’t entirely clear what’s behind Gevo’s boom today beyond that. Given the continued sanctions against Russia, however, renewable energy alternatives could be seeing upside.
Gevo produces a variety of sustainable and renewable fuels, including a jet fuel that is in pre-production stages. Current estimates place the company at least two years away from producing cash flow when it opens its plant. As such, it seems some investors are making a long-term bet on GEVO in hopes of quicker-than-expected returns.
This isn’t the only investment thesis with Gevo these days, however.
GEVO Stock Soars Following Deal With Delta
Today’s jump comes just weeks after Delta Air Lines (NYSE:DAL) signed a multi-year deal with Gevo. On March 22, Gevo struck a deal with the airline to supply 75 million gallons of sustainable fuel annually for seven years in a “take-or-pay” agreement. The arrangement gives Delta some freedom to back out of the deal, but would require the airline to pay an upfront cost to Gevo should it do so. This agreement replaces a pre-existing deal Gevo signed with Delta in 2019, for 10 million gallons per year.
Gevo CEO Patrick R. Gruber had some hopeful words for the deal:
“On behalf of the entire team at Gevo, I want to congratulate our partners at Delta for their leadership in continuously pushing the aviation industry towards net-zero emissions. Delta makes for a great customer, recognizing that big change is needed. I also appreciate their faith in what we are doing at Gevo. Net-zero jet fuels matter. We expect production from our first Net-Zero plant to begin in 2025.”
On the date of publication, Shrey Dua 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.
