Last week, the CEO of Clean Energy Fuels (CLNE) tweeted about an exciting company event sending the stock 10% higher the following day. On Thursday, the company announced the distribution of a renewable natural gas fuel, Redeem, made entirely from waste. The stock though plunged back close to the previous levels as the market expected something bigger regarding customers or government incentives. This round trip move should highlight the perils of investors paying too much attention to social media. A big difference exists between a company important achievement and a stock moving event.
The basics are that the CEO started tweeting on Sept. 24 discussing big things in the works at Clean Energy and natural gas fueling. On that day, he promised a big announcement the following week. Due to his recent addition to Twitter and limited followers (around 425 at time of writing), his proclamation probably didn't get a lot of notice nor did it again with a further tweet about a big announcement on Sept. 26. By the 30th though, the Twitter account was identified and the tweet regarding a big announcement on Oct. 3 hit the mainstream investors. The stock soared the following day based on the typical over-hyped expectations. Below are the three tweets:
Tweet - Sept 24
Tweet - Sept 26
On Oct 1, theflyonthewall attributed the earlier gains of the stock that day to the tweet by the CEO.
While the tweets won't go down as legendary as the Carl Icahn one on Apple (AAPL), it still greatly impacted the stock. Investors that jumped into the stock on the news quickly learned the lesson that what might appear big to a company might not be so big to the stock.
Regardless of the stock action, the news about a transportation fuel sourced from landfills, large dairies and sewage plants could have a long-term benefit to the climate and the economy. The company plans to distribute the Redeem fuel to fleets around the country and at the 35 public Clean Energy stations throughout California. The goal is to distribute 15 million gallons of the fuel over the next 12 months that reportedly reduces carbon emissions by 90% when displacing diesel or gasoline.
The New York Times reported that the fuel is more expensive to produce, but the company is able to charge a comparable price to that sourced from natural gas based on government incentives, especially in California. Though this pricing structure again highlights the concerns about creating a premium product that benefits society and charging a reduced price from standard fuels. All of the benefits are passed on to customers with Clean Energy only benefiting from volumes.
As the chart below shows, the stock didn't soar until Oct. 1 based on the lack of Twitter followers of the CEO, but it is very clear that all of the gains quickly disappeared once investors realized that the news wasn't going to impact profitability at least in the short-run:
The development of fuel from waste products further shows the leadership of Clean Energy in the clean fuel sector. The biggest concern remains that all of the benefits of natural gas as a transportation fuel are passed along to customers leaving limited margin for the company. As highlighted last month in another article, other major catalysts are in the works to turn this stock around.
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