Clean Energy Fuels (CLNE) Stock Doesn't Look Promising Long Term
Despite quick gains, the long-term forecast for Clean Energy Fuels stock might not be a winner. What can investors expect?
June 10 2021, Published 10:58 a.m. ET
Amid meme stock mania, one stock is proving that fundamentals have nothing to do with the equation. Clean Energy Fuels Corp. (NASDAQ:CLNE) has had a difficult decade, but that didn't stop traders from quickly pumping shares.
As for the long-term forecast for Clean Energy Fuels, you might want to take a deeper dive into the company's health.
Why Clean Energy Fuels stock jumped
With a 45.7 percent boost from the afternoon on June 8 to the market open on June 9, Clean Energy saw a sharp boost in trading volume (at least 20 percent stronger than the average volume) and market capitalization. The intensity of the rally didn't last long. The stock dropped more than 16 percent immediately following the opening bell on June 9. The shares are down another seven percent on June 10.
Clean Energy Fuels' financials aren't appealing.
The financials backing Clean Energy Fuels aren't exactly impressive. The revenue is almost half of what it was seven years ago. In 2014, the company had overall revenue of $428.94 million. In 2020, that number was just $291.73 million.
The real interest here is the net income, which has been in the negatives for six of the last seven years. According to Clean Energy's latest metric, it's at a nearly $10 million loss.
Clearly, Clean Energy's lack of profitability has nothing to do with the stock's recent boost. With no corporate news to speak of, the short percentage of float is fairly low compared to other meme stocks at just 6.3 percent.
Even considering all of this, many meme stock traders still have found comfort in CLNE shares.
The rise in CLNE proves meme stocks are about sentiment, not fundamentals.
What differentiates meme stocks from other securities is how they're popularized. While most stocks gain popularity from fundamentals like financials or positive corporate news, meme stocks garner interest from social media.
Sure, the rise in CLNE is nowhere near as dramatic as that of AMC or GME. Still, it's a good example of how short-term sentiment can change the game—but not for long.
A forecast for Clean Energy Fuels' future
The analysts reporting predictions for CLNE stock over the next 12 months are calling for increases at a median of 67.5 percent in the green. It's important for investors to take this information with a grain of salt.
The company's profit margins aren't impressive, and they haven't been for a while. Investors who buy in now are taking the risk of seeing returns fly away by the wayside. Of course, there's always the chance that a prolonged meme stock parade could keep the stock pumping, but the company's atmosphere doesn't lend itself to long-term growth.
Ultimately, due diligence is a personal endeavor, but the long-term forecast for CLNE is far from set in stone. This is especially true given the emotional response to panic selling from many Clean Energy Fuels stock investors.