Gevo (NASDAQ:GEVO) stock is in free fall today, eying a 31% drop after announcing a $150 million securities offering. This morning, the renewable fuels company reported entering an agreement with several institutional investors for the purchase of 33,333,336 shares of Gevo common stock.
So, what’s behind Gevo’s drop today?
The shares will be sold at Gevo’s public offering price of $4.50 per share. At this price, the sale should result in expected gross proceeds of $150 million. According to the company, the funds will be used to “fund capital projects, working capital, and for general corporate purposes.”
Interestingly, this morning Gevo also announced a collaboration with Google Cloud to enhance its bio-fuel analysis. As per the report, Google Cloud will be used to “measure and verify the efficacy of next-generation biofuels across the supply chain via full lifecycle sustainability data tracking.” The partnership will reportedly enhance the company’s ability to lower greenhouse gas intensity over the world.
Gevo Chief Executive, Dr. Patrick Gruber, commented on the new partnership.
Google Cloud and the Verity team are focused on working together to close the data gaps between smart agriculture at the farm level and measuring the carbon intensity through the full carbon lifecycle. We expect to build the technology and tools to track carbon intensity of renewable natural gas, sustainable aviation fuel, renewable diesel, farming, and eventually forestry and forest products.
Unfortunately, the promising news wasn’t enough to convince investors, who largely dumped the stock this morning.
GEVO Stock Plummets, Widening Yearly Losses
Today’s drop comes unceremoniously to Gevo, which was already in the red about 5% this year. Given the greater stock market decline, a 5% loss is actually relatively solid. Indeed, until today Gevo outpaced the S&P 500, which is currently down 14% year-to-date. However, After today’s pending losses, Gevo investors will be surely waiting for a return to favorable trading conditions.
Gevo is best known as a leader in energy-dense, renewable, liquid hydrocarbons. A renewable energy company at heart, in April of this year, Dr. Gruber even testified before Congress as part of the 2022 review of the Farm Bill.
While it’s unclear where 2022 will take the green-forward company. Rest assured investors will be watching GEVO closely as energy prices remain in-focus.
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.