Shares of New Fortress Energy (NFE -7.60%) fell on Wednesday, finishing the day down 8%. The drop came as the S&P 500 and Nasdaq Composite gained 0.5% and 1.1%, respectively.
After months of contentious negotiations that ended with the struggling liquified natural gas (LNG) company finally securing a deal, deliveries began recently. However, a U.S. District Judge issued a temporary order, blocking the company from using vessels that a group of Puerto Rican marine pilots say are unsafe.
The company is appealing the ruling, saying that its boats are safe and that the order could have "catastrophic consequences for Puerto Rico's energy supply."
The latest showdown between New Fortress and Puerto Rico is fueling growing investor concern and sparking condemnation from local politicians like Gov. Jenniffer González-Colón, who said that it was an "outrage that the people of Puerto Rico have to suffer" because of the dispute.
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New Fortress is in hot water
New Fortress is navigating serious financial challenges as its top and bottom lines shrink. The company's debt load is concerningly high, and it was recently forced to sell major revenue-generating assets in Jamaica in order to free up cash. That helps it in the short term, but harms it in the long run.
On the other hand, the company's market cap is only a fraction of its book value, and there is a real turnaround opportunity for investors with high risk tolerance. For most investors, however, the risks are too great, and I would avoid New Fortress stock.
