Energy & Mining

Why Shares of Gevo, Inc. (NASDAQ:GEVO) Rallied

Gevo, Inc. (NASDAQ:GEVO)

Gevo, Inc. (NASDAQ:GEVO) shares rallied by 17.8% after the Chief Executive Officer, Pat Gruber, reaffirmed the company’s growth prospects amidst a changing government landscape and policy initiatives. The executive has also quashed concerns that recent events at the Department of Energy could have a catastrophic impact on the company and the broader BioEconomy.

Gevo, Inc. (NASDAQ:GEVO)
Daily Candle Bar Graph for $GEVO

Luverne Plant Capacity

According to the executive, improving the production capacity of the Luverne plant is a core objective, as focus shifts to targeting the jet fuel, isooctane/renewable gasoline, and isobutanol markets. The CEO expects the efforts to help the company generate a good amount of profit even as the overall industry continues to face uncertainty.

The company is fresh from signing a binding agreement with a 140-year-old Germany company as part of an effort that seeks to strengthen operations on specialty chemicals and fuel products. Gevo, Inc. (NASDAQ:GEVO) is also working on a number of deals to meet the 50% production capacity at the Luverne Plant.

Gevo, Inc. (NASDAQ:GEVO) is a renewable chemical and biofuels company. The company’s core operations revolve around the development and commercialization of alternates to petroleum-based products as a source of energy. The company is currently engaged in the research and development of isobutanol among other biocatalysts.

Gevo, Inc. (NASDAQ:GEVO) is also capable of converting cellulosic sugars into isobutanol, jet fuel, and isooctane

Budget Cuts Impact

The DOE could see its $5 billion budget trimmed by 20% amidst reports the Trump administration is considering a string of budget cuts. The direct impact of the move on Gevo, according to the CEO, is minimal.

“To be very clear the direct impact to Gevo is minimal in those kinds of budget cuts. The potential impact could be more direct on the cellulosic programs which have more exposure to DOE programs,” said Mr. Gruber

Gevo, Inc. (NASDAQ:GEVO) is currently exploring various federal programs with a view of getting loans and grants for financing its operations. Minnesota is one of the states that the company is eyeing for subsidies given that the state has similar programs for chemical products.

In a bid to strengthen its balance sheet, Gevo, Inc. (NASDAQ:GEVO) has restructured its debt structure by exchanging most of its unsecured 2022 converts.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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