Multiple factors are pushing NextEra Energy (NYSE:NEE) down today. The clean energy company recently reported earnings that left investors disappointed. Rising natural gas prices have been one obstacle, but that isn’t even NextEra’s biggest problem. Its solar and storage projects may be delayed until next year due to a probe by the U.S. Securities and Exchange Commission (SEC). As NEE stock continues its downward spiral, investors are left with questions about both the company and the sector it leads.
What’s Happening With NEE Stock
Despite a slight attempt to rally this morning, NEE stock appears to be in a race to the bottom. As of this writing, it is down almost 5% for the day, a mark it looks poised to hit soon. NEE shows no signs of rebounding, and frankly, there’s no reason that it should. Today has brought an onslaught of bad news that has shrouded the stock in the type of uncertainty that Wall Street hates.
After plunging in late January 2022, NEE stock looked poised to rebound and emerge as a winner of the clean energy revolution spurred by America’s quest for energy independence. Let’s take a closer look at what today’s events mean for the company and its future.
Why It Matters
As the world’s largest renewable energy producer, many eyes were on NextEra today. They were disappointed, as the company reported losses of $1.77 billion and an after-tax impairment of $600 million on its Mountain Valley Pipeline investment. It stands to reason that climbing natural gas prices would pose difficulties for companies in the clean energy space. That said, a net loss of 23 cents per share, totaling $451 million, is hardly reassuring for investors. One year ago, the company posted a net profit of 84 cents per share, which totaled $1.67 billion.
While poor earnings can be overcome, NextEra’s SEC probe also poses complications for the company. The investigation concerns Chinese solar technology providers, and there’s no telling for how long it will continue. As Bloomberg reports, “As much as 2.8 gigawatts of such projects planned for this year ‘may shift to 2023 due to circumvention investigation,'” referencing the company’s Q1 earnings presentation.
That number is certainly large enough to be significant, especially if the aforementioned delays persist. Solar tech projects could have given the company a valuable and much-needed edge as it worked to overcome the constraints posed by natural gas demand. Now, the ongoing probe threatens to derail the company’s progress even more. This development raises more questions as to what the next quarter will mean for investors.
InvestorPlace contributor Cristian Docan reported late in March that the bottom line for NEE stock was expected to rise by as much as 53% in 2022. The SEC launched the probe into Asian solar production one week later. Bloomberg noted that it had the potential to disrupt the solar sector. NextEra now knows that to be true.
What It Means
This doesn’t mean that clean energy plays should be avoided in the upcoming quarter. However, investors should proceed carefully when it comes to companies heavily invested in solar tech. The U.S. is highly dependent on Chinese solar imports. Unless the SEC concludes its investigation soon, it may be a difficult season ahead for some clean energy producers.
NEE stock is no exception. The company has other holdings, including wind, geothermal and hydroelectric power. However, unless it can keep scaling non-solar developments, the road ahead will be difficult.
On the date of publication, Samuel O’Brient did not have (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.
