Shares of New Fortress Energy (NFE 6.08%) fell this week, finishing down 24%. The drop came as the S&P 500 and Nasdaq-100 lost 2.4% and 2.3%, respectively.
The embattled liquified natural gas (LNG) company was blocked from delivering LNG shipments into Puerto Rico by a U.S. district judge. A temporary injunction was issued after a group of marine pilots filed a lawsuit alleging the company's vessels were unsafe.
The company is appealing the ruling, saying the order could have "catastrophic consequences for Puerto Rico's energy supply" and that the tugboats it had contracted to make the deliveries were safe.
This comes after months of contentious negotiations between New Fortress and Puerto Rico. This latest incident is sparking investor fear that the trouble is far from over and condemnation from local politicians like Gov. Jenniffer González-Colón, who called it an "outrage" that the "people of Puerto Rico have to suffer."
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New Fortress is struggling
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.
