Renewable natural gas (RNG) solutions provider Clean Energy Fuels (NASDAQ: CLNE)
stock has been riding the global decarbonization
and clean energy
tailwinds to lead the nation into the green era. With a name like Clean Energy Fuels, it’s easy to assume the objectives of the Company. The Company distributes RNG in the form of compressed natural gas (CNG) and liquefied natural gas
(LNG) for public and private vehicle fleets. Its RNG is one of the lowest carbon alternative fuels in the market. Fuel sales drive most of the Company’s revenue growth with over 560 stations throughout the U.S. and Canada. The Company also designs, builds, and operates fueling stations generating station construction sales. Clean Energy also has junior venture (JV) and investment partnerships with major players like Chevron (NYSE: CVX)
, Total and British Petroleum (NYSE: BP)
further lending credibility to the operations. The social, legal, and legislative trends towards zero-emission vehicles is the major tailwind that should drive shares higher. The Biden administration announced it is targeting greenhouse emissions to be reduced by at least 50% by the year 2030 relative to the level in 2005 and called for $35 billion in funding at a climate summit in April 2021. The Company also disclosed an investment from Amazon (NASDAQ: AMZN)
on April 19, 2021, that went unnoticed as shares spikes then collapsed afterward. Risk tolerant investors seeking exposure in RNG can monitor for opportunistic pullback levels in shares of Clean Energy Fuels.
Amazon RMG Supply Deal
On April 19, 2021, Clean Energy announced a deal with Amazon to provide RNG to its fleet of natural gas trucks. Shares spiked then collapsed on dilution concerns since it requires an investment from Amazon to purchase up to 53.1 million shares through a tranche of 13.28 million warrants at a strike price of $13.49 and subsequent offerings up to $500 million to be vested upon fuel purchases. This would equate to a 28% dilution of the float. Fuel will be distributed through 27 Clean Energy fueling stations and 19 non-exclusive new or upgraded Clean Energy-owned states expected to be constructed by year-end.
Q1 2021 Earnings Release
On May 6, 2021, Clean Energy released Q1 2021 results for the quarter ending in March 2021. The Company reported earnings per share (EPS) loss of (-$0.01) excluding non-recurring items, versus consensus analyst estimates for breakeven, a (-$0.01) miss. Revenues fell (-10.3%) year-over-year (YoY) to $77.1 million, missing analyst estimates for $75.26 million. The Company expects GAAP loss for 2021 to be around (-$76 million) and adjusted EBITDA is expected between $60 million to $62 million.
Conference Call Takeaways
Clean Energy CEO Andrew Littlefair set the tone, “Our new strategic partnership with Amazon is multi-pronged and we believe positions Clean Energy very well for the future and confirms the direction we set for ourselves years ago. As anticipated, the COVID pandemic continued to impact our volumes, but with stronger environmental credit pricing, our adjusted EBITDA of $11.7 million was up 4% over the last year. As with the rest of the country, we are optimistic that the overall economy, including transportation sector specifically, will continue to rebound.” He updated on the $146 million cash positions against the $90 million in debt at the end of Q1 2021. CEO Littlefair expects a rebound in the two hardest-hit sectors which are airport and transit fleets. He reminded analysts they are under a non-disclosure restriction with Amazon; therefore, details are limited. He added, “Even so, I want to make sure everyone fully understands this significance to Clean Energy. This new strategic partnership with Amazon is based on two different agreements. One is a commercial deal and is about Amazon agreeing to buy a substantial amount of renewable natural gas fuel through our stations, potentially hundreds of millions of gallons of RNG.” He concluded, “We believe the strategic partnership with Amazon could be worth $1.5 billion or more in gross proceeds between revenue from fuel sales and proceeds from cash exercise of the warrant.” Keep in mind if Amazon did exercise all the warrants at $13.49, then proceeds would be around $700 million alone from the exercise but also result in an additional 27% dilution of the float.
CLNE Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a broader view of the landscape for CLNE stock. The weekly rifle chart illustrated how shares peaked at the $19.69 Fibonacci (fib) level and collapsed down to the $7.50s level before coiling back up on the weekly market structure low (MSL) buy trigger when shares rose through $8.18. The weekly 5-period moving average (MA) support is rising at $10.12 as it forms a channel tightening towards the weekly 15-period MA at $10.93. The weekly stochastic crossed up through the 20-band. The weekly market structure high (MSH) triggered under the $14.01 level. The daily rifle chart has peaked off the $14.34 fib and is starting to appear to break down as the stochastic forms a bearish mini inverse pup lower. The daily 5-period MA is crossing down at the 15-period MA at $11.08 potentially causing a breakdown towards the daily lower Bollinger Bands (BBs) down at the $7.08 price level. Prudent investors can scale into opportunistic pullback levels at the $10.49 fib, $9.89 fib, $9.29 fib, $8.98 fib, $8.18 fib, $7.29 fib, and the $6.46 fib. The upside trajectories range from the $13.32 fib up towards the $17.17 fib level.
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