Please ensure Javascript is enabled for purposes of website accessibility

Why Just Energy Stock Dropped 30% Today

By Howard Smith - Feb 22, 2021 at 11:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The electricity retailer is going to take a big hit, and may not recover, from the Texas power grid breakdown.

What happened

Shares of Canadian electricity and natural gas retailer Just Energy Group (JE -13.52%) are continuing to be impacted by the severe winter storm in Texas and related power grid breakdown. As of 11:25 a.m. EST, shares of Just Energy were down 30% compared to Friday's close. 

So what

Last week, the company said it would delay filing its financial statements due to unknown impacts from the Texas weather event. Just Energy services 10 U.S. states including Texas. The company said in a statement last week that the Texas situation "may result in a positive or negative financial impact to the company, which could be substantial." 

Today, a new statement confirmed the likelihood that the situation "has resulted in a substantial negative financial impact." 

winter ice storm causing power lines to be down

Image source: Getty Images.

Now what

Just Energy now says it won't be able to file its financial statements and executive reporting documents until Feb. 26. It said it can't determine the financial impacts at this time due to problems obtaining "accurate information regarding customers' usage from the applicable utilities." 

But based on the real market prices of about $9,000 per megawatt hour (MWh) during much of the utility crisis, it expects losses could be approximately $250 million. To put that in perspective, the market cap of the entire company is currently about $200 million. 

There is a chance the Texas state government could play a role in a resolution, but barring that, Just Energy says that the impact "could be materially adverse to the company's liquidity and its ability to continue as a going concern." Investors today are heeding that warning. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Just Energy Group Inc. Stock Quote
Just Energy Group Inc.
JE
$0.22 (-13.52%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.