What happened

The shares of California utility PG&E (NYSE:PCG) fell 45% in January, according to data provided by S&P Global Market Intelligence. That, however, doesn't do justice to the losses here. The shares lost a similar amount of value in 2018 and were, by the end of January, off from their 2018 highs by nearly 75%. And this is hardly surprising.

So what

PG&E equipment has been accused of starting crippling wildfires in California. That puts the company on the hook for tens of billions of dollars in damages -- and it simply doesn't have the resources to cover such costs. Late in 2018, it looked as if the State of California would hand the regulated utility a lifeline, allowing costs to be recouped from customers. However, as time progressed, it became increasingly clear that even this would not be enough to save PG&E.   

A man with high voltage power equipment behind him

Image source: Getty Images.

Which is why, in early January, the utility announced that it would declare bankruptcy, pushing shares sharply lower. Toward the end of the month, it followed through on that announcement. The shares are still trading, with a recent price of around $14. The fallout from this mess, however, isn't over yet. And this is the second time PG&E has put itself into bankruptcy court, which isn't a particularly good omen for investors.

Now what

PG&E is a highly speculative special-situations stock at this point. It is working through a bankruptcy proceeding and still faces material legal and regulatory headwinds that are hard to quantify. Most investors -- if not all of them -- should avoid the stock. The time and effort needed to dig into the complex issues here will likely far outweigh any upside potential for most investors.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.