Last week, an environmental disaster ravaged the Hawaiian island of Maui, which witnessed a wildfire that USA Today describes as “the deadliest U.S. wildfire in over a century.” The wildfire has claimed 96 lives so far and destroyed over 250 buildings.
Climate scientist Michael Mann, Director of the Penn Center for Science, Sustainability and the Media, recently attributed the tragic event to the climate crisis. However, concerns are also rising that some of the blame may be on Hawaiian Electric Industries (NYSE:HE). The largest power supplier in Hawaii is facing an uncertain future as HE stock plunges on potential links to the fires.
What do investors need to know about HE stock’s alleged connection to the wildfires? Let’s dive deeper into the details.
What’s Happening With HE Stock?
Last Friday, Hawaiian Electric saw shares plunge after months of remaining almost stagnant. Despite demonstrating little growth, HE stock hadn’t fallen much over the past two quarters. Last year, InvestorPlace contributor Faizon Farooque advised investors to sell HE stock due to its entrenchment in local markets. Now, this business model is strongly working against the company as speculation mounts that it may be connected to the fires. Bloomberg reports:
“Shares fell 39% Monday morning to $19.90 as of 11:15 a.m. New York time. Hawaiian Electric, which operates the utility that serves Maui, has come under criticism for not turning off power despite weather forecasters’ warnings that dry, gusty winds could create critical fire conditions. Plaintiffs attorneys are homing in on the utility’s equipment as a possible source of ignition and plan to file lawsuits this week.”
As of this writing, HE stock is down more than 37% for the day, but its problems may be about to get much worse. According to the lawsuit, Hawaiian Electric and its subsidiaries understood the risks that come with keeping power lines activated during a High Wind Watch with Red Flag Warning conditions. Nevertheless, they opted against de-energizing them. The lawsuit also alleges that even after “some poles and lines had fallen and were in contact with the vegetation or the ground” the company did not move to take action.
If the lawsuit continues, the charges against Hawaiian Electric could be severe. HE stock is likely to continue struggling until any and all disputes are resolved. And a resolution likely won’t be soon. There wasn’t much reason to bet on HE shares before, but now there’s ample reason to avoid the company entirely.
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.
