PG&E (PCG) Stock Soars – Company Cleared of Causing Wildfire
Shares of Pacific Gas & Electric (PCG), California’s largest utility owner, soared late Thursday. The stock’s surge was prompted by an announcement from the California Department of Forestry and Fire Protection. ‘Cal Fire’ cleared PG&E of causing the deadliest California wildfire of 2017, which killed more than 20 people and destroyed more than 5000 buildings. The announcement couldn’t have come at a better time for the beleaguered company. PG&E has been plagued by numerous lawsuits related to wildfires. Its debt rating has been slashed to junk status. And there’s the issue of the looming Chapter 11 bankruptcy caused by the company’s billions of dollars in potential liabilities.
PCG Stock Surges 80%
After Cal Fire cleared PG&E, PCG shares popped a whopping 80%+. The stock rose to a high of $14.50 at one point late in the trading day before closing out the day slightly below that intraday peak. While this was indeed an epic spike for the stock, however, we should keep things in proper perspective. Shortly after the company’s last earnings release in early November, the stock plummeted from the high $40’s by more than 60% to below $20 per share. By mid-January (last week), the stock had bottomed around a $5 trough. Since then, the stock has struggled to climb above $8. And then, of course, the big surge happened on Thursday.
Where the Stock Goes from Here
Where does the stock go from here? Yes, the company has been cleared of responsibility for the 2017 wildfire. But there are other fires that the company is still being investigated for. This includes an even larger one that occurred last November in Northern California. And the company’s bankruptcy filing will very likely proceed as planned later this month. So while the stock’s relief rally on Thursday was indeed a second wind for the company, the likelihood of a sustained rebound and recovery for PCG remains low.
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Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don