Some investors are learning an old lesson the hard way Wednesday: The higher stocks go the further they can fall.
Volatility can beget volatility, in any direction, and two hot stocks just hit bumps in the road.
Stock in FuelCell Energy is up more than 290% since the U.S. presidential election—and up more than 260% year-to-date as of Tuesday’s closing price. Investors have become more excited about hydrogen and green energy technology with the election of Joe Biden.
FuelCell shares closed at about $9 Tuesday so investors were surprised by news that FuelCell is selling stock at $6.50 a share to raise about $130 million. FuelCell isn’t profitable yet and is taking advantage of recent stock strength to improve its balance sheet. Shares were down about 20% in premarket trading.
Stock in commercial vehicle maker Workhorse is also down about 20% in premarket trading, but not because of anything the company did. Workhorse makes all-electric delivery vans and is bidding to replace the USPS white, right-hand drive, mail trucks. The Post Office decided to delay a contract decision from year-end 2020 to the first quarter of 2021.
At $20, Workhorse stock is still up about 550% this year.
With gains like that, investors have to be ready for some extra volatility.
—Al Root
*** Join Lauren R. Rublin, Barron’s senior managing editor, and Neil Klein, senior managing director of Carret Asset Management, today at noon to discuss the outlook for municipal bonds. Register here.
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U.K. Greenlights Pfizer/BioNTech Covid Vaccine. Rollout to Begin Next Week.
The British government said Wednesday that it would start a vaccination campaign against the coronavirus as soon as next week, after the U.K.’s medicines regulator suggested the approval of the Covid-19 vaccine developed jointly by German biotechnology company BioNTech and U.S. pharmaceuticals group Pfizer.
- The Medicine and Healthcare products Regulatory Agency recommended the vaccine’s temporary authorization for emergency use, which came before similar decisions expected from the U.S. and European Union authorities before the end of the year.
- The U.K. government has preordered 40 million doses of the BioNTech/Pfizer vaccine, which has shown efficacy of up to 95% in late-stage trials. Health Secretary Matt Hancock said that 800,000 doses would be available next week.
- The U.K.’s Joint Committee on Vaccination and Immunisation determined that the order of priority for distribution of the vaccine should be first residents in care homes, then the elderly over 80 years of age and front line health and social care workers such as doctors and nurses.
- The rest of the population will then be vaccinated gradually in declining order of age.
- Britain on Wednesday exited the one-month lockdown decided by the government to cope with the virulent second wave of the virus, and entered a three-tier system of restrictions voted by Parliament after an acrimonious debate Tuesday.
What’s Next: Prime Minister Boris Johnson can rejoice at some rare good news in the fight against a pandemic that proved more damaging for the U.K. than for most other European countries. Now the government will be judged on how smoothly it handles the logistics of a vaccine notoriously hard to store, transport and handle.
—Pierre Briançon
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CDC Panel Makes Recommendations on Covid Vaccine
A Centers for Disease Control and Prevention panel recommends health-care workers and those residing in long-term care facilities be first in line for a Covid-19 vaccine. The CDC’s Advisory Committee on Immunization Practices voted 13-1 on recommendations prioritizing such groups for the initial wave of vaccines.
- CDC medical officer Kathleen Dooling said there are about 21 million health-care workers at hospitals, long-term care facilities, pharmacies, home health-care agencies, emergency medical services, and outpatient clinics.
- Through November, there were 243,000 cases among such health-care workers, and 850 deaths. Nursing home residents and staff have represented 6% of Covid-19 cases in the U.S., and 40% of deaths.
- Helen Talbot, a public health expert at Vanderbilt University, was the one dissenting vote. She supports health-care workers being first in line, but is concerned that not enough was known about the safety of the vaccines for elderly residents of long-term care facilities.
What’s Next: Pfizer and BioNTech’s vaccine will be reviewed by an expert committee scheduled on Dec. 10 in the U.S. Food and Drug Administration. Moderna’s advisory committee review is slated for Dec. 17. Both firms say they can have doses ready to go within days of approval.
—Connor Smith
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A New Stimulus Plan Puts Heat on Lawmakers to Act
Amid surging Covid-19 cases and signs of a slowing recovery, a group of bipartisan senators unveiled a compromise coronavirus stimulus proposal worth about $900 billion on Tuesday, in an attempt to break the monthslong deadlock on Capitol Hill.
- The package includes $300 weekly federal unemployment payments, $250 billion for ailing state and local governments, $288 billion for the Paycheck Protection Program and other business aid, $50 billion to fund vaccine distribution, and a temporary liability shield for employers. Another round of checks to taxpayers is not included.
- A separate $500 billion plan from Senate Majority Leader Mitch McConnell is being circulated among Republicans and reportedly has the administration’s support. House Speaker Nancy Pelosi wants a $2 trillion package and President-elect Joe Biden is preparing to push for an even larger stimulus package once he takes office.
- Treasury Secretary Steven Mnuchin was pressed by Democrats at a Senate hearing over his decision to end certain emergency lending programs at the central bank. Mnuchin insisted his motivations were not political, while Fed Chair Jerome Powell indicated that he would have preferred for the programs to continue operating.
- In another blow to President Donald Trump’s challenge of the election results, Attorney General William Barr said the Justice Department has found no evidence of voter fraud that could have affected the election outcome. And a Georgia election official, Gabriel Sterling, urged Trump to “stop inspiring people to commit potential acts of violence” as he contests results.
What’s Next: While the bipartisan stimulus proposal is the first movement in negotiations for a new stimulus package since the election, it’s unclear if it will receive support from Congressional Democrats, GOP leadership or the Trump administration. Nonetheless, stocks rose Tuesday on renewed stimulus hopes.
—Ben Walsh
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Workers Aren’t Heading Back to the Office, Causing Problems for Cities
Across the U.S., big cities have been waiting for workers to return to offices. While some trickled back, the vast majority have stayed away as Covid-19 cases spike across the country, according to access-card data from Kastle Systems, a security firm.
- The percentage of workers back in their offices hit a low of 14.9% in early April and gradually increased to over 27% in late October, before falling back down to 18% as of Nov. 25, Kastle Systems data shows, a dip that could be partially explained by the Thanksgiving holiday.
- Many companies want their employees back in the office, which makes collaboration, casual interactions, and employee management all easier. Workers want to go back as well, with 75% saying they’d like to return to the office at least part-time, according to a survey by commercial real estate company JLL.
- Emptied-out downtowns are also causing financial headaches. Bars, restaurants, and stores that cater to office workers are struggling, revenue-starved mass transit systems are facing budget shortfalls, and the rise of remote work has caused some people to leave big cities altogether, depriving municipalities of tax revenue.
- The continued reluctance of most companies to mandate a return to the office or employees to voluntarily return is based on solid evidence of the dangers of gathering indoors for long periods of time.
What’s Next: With Covid-19 cases surging and vaccinations on the verge of rolling out, many companies now seem content to wait for a return to normal before bringing employees back to the office. The health benefits of that decision are positive, but the fiscal damage to cities may be immense.
—Ben Walsh
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Nasdaq Proposes New Rules Requiring More Diverse Boards
If companies want to list their shares on the Nasdaq, they will need to have at least two diverse directors on their board, under a new rule proposed by the exchange.
- The rule would require most Nasdaq-listed companies to have at least two diverse directors, including one who self-identifies as female and one who self-identifies as either a minority or LGBTQ+.
- Some of the 3,000 companies listed on the exchange would be allowed to meet the requirements with two female directors. Firms that don’t meet the requirements would have to justify why not in order to remain listed. More than 75% of companies on the exchange don’t meet the proposed requirements.
- The rule must be approved by the Securities and Exchange Commission and would take effect one year later. The Nasdaq is hoping that its submission of the proposed rule will spur the SEC to take broader action and apply a similar requirement to all company boards under its regulatory purview.
- “The ideal outcome would be for the SEC to take a role here,” Nasdaq CEO Adena Friedman told the New York Times. “They could actually apply it to public and private companies because they oversee the private equity industry as well.”
- The move comes amid increasing calls from a variety of corporate stakeholders for companies to have more diverse leadership, following the Minneapolis death of George Floyd while in police custody on Memorial Day.
What’s Next: Beyond Nasdaq’s proposed rule, California recently put in place a law requiring any company with headquarters in the state to have at least one diverse director by the end of next year and two or three by the end of 2022.
—Ben Walsh
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Dear Moneyist,
I didn’t want to put my parents at risk for Thanksgiving, so I booked a house on their street two months ago, and stayed there for six days. My wife and I sequestered for another six days beforehand. We both got Covid-19 tests before we sequestered, which were negative, and drove for seven hours to see my parents. They have been isolated and have not seen many people over the last nine months. It’s been hard for them, so it was worth the trip.
However. This is a big however...
We booked an Airbnb for $900 two houses away from my folks. It belonged to a family that was also visiting their family at Thanksgiving, so it seemed like a slam dunk. Kismet!
We couldn’t believe what awaited us: unflushed toilets, dirty dishes in the dishwasher, uneaten food in the refrigerator, they didn’t even empty the wastebasket although the instructions asked us to do so when we left. They were nice people, but it took them six hours to respond to one query about the central heating.
—Shocked, Very Little Awe
Read The Moneyist’s response here.
—Quentin Fottrell
***
—Newsletter edited by Anita Hamilton, Stacy Ozol, Mary Romano, and Bob Rose
December 02, 2020 at 07:58PM
https://www.barrons.com/articles/a-hard-lesson-in-green-energy-stocks-51606913919
A Hard Lesson in Green Energy Stocks - Barron's
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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