Aemetis (NASDAQ:AMTX) is moving today on a new deal with JetBlue Airways (NASDAQ:JBLU). This morning, the renewable biofuels producer announced it will be supplying the low-cost airline with 125 million gallons of sustainable aviation fuel. As per the deal, this fuel will be delivered throughout the next decade. Now, AMTX stock is on the move. Despite a tough season, the deal may also signal a turnaround for JetBlue.
AMTX stock has been moving up and down ever since this morning’s announcement. First, Aemetis began the day by spiking almost 2%. Of course, shares did dip before the end of the first hour of trading, but they rallied soon after. As of this writing, AMTX is down slighltly for the day. However, it could soon rise again.
The other side of this deal isn’t doing nearly as well, however. JBLU stock began the day by plunging more than 5%. Now, although trying to rally, the stock is in the red by more than 9%. That said, this decline isn’t due to the partnership, which may lift JBLU in time. Rather, bearish energy has surrounded shares of the airline for months, even as travel restrictions have eased.
Let’s take a look at what this partnership means for both companies moving forward.
What’s Happening with AMTX Stock?
AMTX stock has been trading at less than $10 per share since last week. For investors who remember it traded at more than twice that in November, that doesn’t look good. However, this name should also be evaluated from a macro perspective. As a producer of aviation fuel, the company was going to face a difficult industry landscape due to Covid-19 cases no matter what. For example, the omicron variant defined much of late 2021 and early 2022, grounding many flights in the States. Uncertainty has pushed travel stocks down across the board.
Now, though, Russia’s invasion of Ukraine is pushing oil prices sky high as well. That has led to new complications for the sector. Things may swing in favor of a company like Aemetis, however.
Moving forward, airlines are going to be looking toward more sustainable fuel options due to rising oil prices. Travel demand will likely to be high this summer as well, as long as Covid-19 cases remain at current levels. As airlines seek alternative ways to fuel their jets in order to meet demand, they will turn to companies like Aemetis. The company stated the following in its deal announcement:
“Sustainable aviation fuel provides significant environmental benefits compared to petroleum jet fuel, including a lower lifecycle carbon footprint and reduced contrails. The blended sustainable aviation fuel to be supplied under this agreement is 40% SAF and 60% Petroleum Jet A to meet international blending standards.”
What It Means
Looking forward, JetBlue is wise to be procuring a contract with Aemetis right now. The deal will help position JBLU to save on fuel costs as oil prices continue to rise. In turn, that will help it to keep ticket costs relatively low. The deal is especially noteworthy for investors, however, because other airlines could soon follow.
Aemetis has fallen considerably since 2021, shedding more than 50% from its November peak. This makes it a great buy-the-dip opportunity before new demand for sustainable fuel sends more airlines its way.
As of right now, AMTX stock remains an undervalued small-cap play. Investors should watch it carefully as the travel industry landscape shifts in its favor.
On the date of publication, Samuel O’Brient 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.