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Clean Energy Fuels Firing Up For Volatility

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·2 min read
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The meme stock mania has struck again, although this time the choice is a natural gas company based out of Newport Beach, California. Clean Energy Fuels Corp. (CLNE) has had a whirlwind of a week, rising about 54% over the last seven trading sessions. The stock began to show up in online chatrooms and community discussion groups, and daily volume skyrocketed to almost five times its average during trading on Wednesday. (See CLNE stock analysis on TipRanks)

Five-star analyst Pavel Molchanov of Raymond James Financial covered the stock in his report, reiterating the underlying fundamentals and maintaining his Sell rating. Molchanov did not assign a price target, but was sarcastic in saying that “at more than 30x EBITDA, the stock of a pure commodity business is surely priced for perfection.”

Molchanov stressed that while online daytraders were buying up the stock, massive amounts of shares were subsequently pouring into the market. Since late April, Clean Energy’s largest investor, TotalEnergies (TOT), has sold 4.1 million shares, and intends to continue capitalizing on the inflated share price. The analyst was completely understanding why shareholders would sell their positions for profit after the stock gained three times its initial buy-in cost.

Furthermore, Molchanov noted that even CLNE has been offering equity, selling $100 million in shares with intention for $100 million more. Fundamentally speaking, this level of dilution should bring the share price to a much lower level.

This does not mean TotalEnergies is dumping its entire position. The French supermajor oil company still holds 46.8 million shares of Clean Energy. However, it would be possible to deduce that Total will take more profit if Clean Energy continues its meteoric climb.

On TipRanks, Clean Energy Fuels has an average rating consensus of Moderate Buy, based on 2 Buy, 1 Hold, and 1 Sell ratings. The average analyst CLNE price target is $15.33, reflecting a potential 12-month upside of 17.74%.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.