![]() While Lucid just announced that it began deliveries of its new Lucid Air Sapphire on Sunday, the production ramp for it is costly. In addition, all three companies are either in need of outside capital now or may need more in the future. And when long-term interest rates rise, that depresses the present-day value of future earnings. Therefore, all of their value lies in their future theoretical profits. Lucid and Plug Power are unprofitable growth companies that are losing lots of money on their bottom lines. These three clean energy names are those types of stocks, both from valuation and operational standpoints. The Federal Reserve doesn't set long-term interest rates as it does short-term interest rates, but the fact that Tuesday saw both lower long-term rates and an indication that we have reached peak short-term rates lit a fire under many rate-sensitive stocks. economy is going to slip into a recession. He further said he does not think the U.S. It's also possible that the prior rapid rise in yields has simply exhausted itself.Īdditionally, Atlanta Federal Reserve Bank President Raphael Bostic spoke on Tuesday at an American Bankers Association convention, and said he doesn't think the Federal Reserve will need to raise interest rates any further to get inflation back to its 2% goal. It's possible that the weekend's tragic geopolitical events are spurring the move. However, investors sometimes view long-term Treasuries as "safe haven" assets in times of uncertainty. It's never easy to pinpoint exactly why bond yields move one way or the other. The 10-year Treasury bond yield was down about 16 basis points to 4.645% as of this writing, and down from a high of 4.887% in recent days. Perhaps the key element driving Tuesday's rally was the decline in long-term Treasury Bond yields. However, dovish comments from a Federal Reserve official and a sharp reversal in long-term bond yields led to a bit of relief for their stocks on Tuesday. Thus, they have been battered by the rapid rise in long-term interest rates in the market in recent months. Second, all three of these companies are still dependent on outside funding to some extent, given they are all still in their growth phases. ![]() First, each is at the forefront of the clean energy revolution - Lucid as a designer and manufacturer of luxury electric vehicles, Plug Power as it builds out an end-to-end clean hydrogen ecosystem, and NextEra as a partner to clean energy-focused utility NextEra Energy (NYSE: NEE). ![]() These three companies have two big things in common. Shares of Lucid Motors (NASDAQ: LCID), Plug Power (NASDAQ: PLUG), and NextEra Energy Partners (NYSE: NEP) had rallied by 6.6%, 11.1%, and 8.3%, respectively, as of 2 p.m.
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