If anyone thought utilities were a safe place for investors to hide, they’d need to think again. Even if the stock market rally is a big fat lie, indices still seem to be the better prospect. Especially in the context of the ongoing California wildfires.
Pacific Gas & Electric Company (NYSE: PCG) stock has been hammered in the last seven days recording a loss of more than 50%. Despite intraday relief on Monday, sellers drove prices back down to finish the session near the lows at $3,78 a share.
The long term picture is equally abysmal. PG&E once soared above $70 a share back in September of 2017. In the last two years, however, the natural gas and electricity provider has suffered a 95% loss in market value.
The dire news continues this week after the company said on Monday that its own power lines may have actually started two California fires. The result has caused widespread evacuations in Lafayette, roughly 20 miles out of San Francisco.
Despite desperate efforts to contain the problem, the company is finding it increasingly difficult to predict the path of the blaze. Planned power outages did not include an area of the town where the fires began.
Earlier this month CCN.com reported that PG&E was burning approximately $216,000 every hour of its planned power outage. The National Weather Service expects similar conditions for Tuesday and likely into the rest of the week.
Earlier this year the utility giant filed for bankruptcy protection in relation to last year’s deadly Camp Fire. In June PG&E bondholders proposed an exit plan worth up to $30 billion in the hopes of escaping chapter 11 bankruptcy.
That’s all been thrown out of the window, however, with this latest round of fires. ABC7 News contributor Phil Matier says the company is caught between a rock and a hard place:
“PG&E is in a damned if they do turn off the power, they’re damned if they don’t because they’re responsible for anything that happens with those lines, whether it’s their fault or not.”
He goes on to say:
“You’re talking about $30 billion already and it’s growing every year until the problem is fixed. Basically you’re saying buy something that’s guaranteed not to make money.”
Price is holding in pre-market trading but is likely to tumble further in line with the previous three trading session opens.
Last modified: September 23, 2020 1:14 PM