Why Clean Energy stocks exploded higher, CBAK fell, and Bloom Energy just so-so today

What happened

Monday turns into a busy day in clean energy room, with proportions of Clean energy fuels (NASDAQ: CLNE) exploded (in a positive way) at 31.2% after 11:45 a.m. EST. Chinese car battery manufacturer CBAK energy (NASDAQ: CBAT) is down 10%, and the fuel cell company Flower energy (NYSE: BE) has increased, but only a modest 1.7%.

Let’s see if we can unpack it all for you.

so what

This morning Clean Energy announced that it has signed a multi-year contract with the Los Angeles County Metropolitan Transportation Authority to supply an estimated 47.5 million gallons of renewable natural gas (RNG) “to power the largest fleet of transit buses in the country.”

According to Clean Energy, LA Metro plans to switch its bus fleet from diesel fuel to “clean, low-carbon fuel” in the next five years. 2,400 buses in the local transport system already run on RNG, a methane gas obtained from organic waste.

There is a chance this deal will get even bigger. On the one hand, the five-year contract includes an option to extend the term by “up to three more years”. In addition, LA Metro is trying to achieve a “100% emission-free bus fleet by 2030” and “net zero emissions … by 2050”. Because RNG captures methane that would otherwise escape into the atmosphere before it burns as fuel and releases carbon, it is not considered emissive New Carbon in the atmosphere. Therefore, expanding future RNG purchases from Clean Energy could be one way LA Metro continues to move closer to its goal.

What now

Immediately after the LA Metro News ran, we learned that investment bank Craig-Hallum had doubled its price target on Clean Energy stock to $ 25. According to TheFly.comReporting on the change, Craig-Hallum believes Clean Energy is playing a “critical role” in curbing greenhouse gas emissions, particularly through its focus on renewable natural gas – which analysts say will account for 100% of Clean Energy’s revenue by 2025.

But the bank also highlighted a trend it believes is even more important than that deal with LA Metro. As the analyst points out, Amazon (NASDAQ: AMZN) just ordered 1,000 natural gas truck engines from a joint venture between Cummins and Westport, so join UPS in what the analyst believes will become a perennial trend of major Transport company their fleets away from diesel and towards natural gas.

In the analyst’s opinion, this is great news for natural gas-focused companies like Clean Energy – but a bad sign of the prospect of fuel cell and battery companies taking over the trucking sector. It is probably no coincidence that Bloom Energy stocks are seeing sluggish gains while today Plug-in power supply (NASDAQ: PLUG) Stock – the guiding star of the fuel cell industry, has fallen a fraction of a percent.

In the batteries space, CBAK Energy announced today that it is selling $ 70 million of new shares at $ 7.83 per share (approximately 8.9 million shares) and is also issuing 11.2 million warrants to purchase additional shares Buy shares at an even lower price (totaling about 20.1 million shares worth diluting) in an effort to raise cash to “accelerate the company’s business plan, repay some of its outstanding debt, and any additional needs to cover working capital “.

While the purpose of raising capital sounds reasonable, it also illustrates the continued unprofitable business activity of CBAK, which has not made a profit for more than five years. If Craig-Hallum is right, and the transportation industry has decided that natural gas is the best way to move goods with minimal carbon emissions – and that “electric” via batteries and fuel cells may not – then that obviously wouldn’t be great news for a battery company like CBAK.