What happened
Shares of Montauk Renewables (MNTK -0.55%) fell as much as 22.5% in trading on Friday after the renewable energy company reported 2022 financial results. Shares closed the day down 14.3%.
So what
In the fourth quarter, revenue was $49.6 million, up 9.7% from a year ago but falling well short of the $61.8 million that analysts expected. Earnings of $0.05 per share were also $0.04 behind estimates.
For the full year, revenue rose 39% to $205.6 million and net income jumped nearly 900% to $35.2 million. For the year, production of renewable natural gas (RNG) fell 2.9% from a year ago.
In 2023, management expects RNG revenue to be between $137 million and $145 million on a slight production increase. Renewable electricity revenue is expected to be $18 million to $19 million.
Now what
The implication from guidance is that revenue is slowing down and earnings might do the same next year. Natural gas prices have been falling and interest rates have been rising, which puts pressure on Montauk Renewables' business over time. And it doesn't look like either of those trends are going to change.
I think a wait-and-see approach is the best move here. Alternative sources of energy are growing and will be valuable over time, but there are plenty of companies that have disappointed investors as market pressure comes to bear. Montauk Renewables seems to be facing some of those headwinds now.