What: Shares of Clean Energy Fuels (NASDAQ:CLNE) jumped 14% as of 4:00 p.m. EST as the spread between natural gas and oil widened, and investors piled on anticipating its after-hours earnings release.
So What: For Clean Energy Fuels to make its network of natural gas fueling infrastructure work, the price between a gallon equivalent of natural gas needs to stay well below the price of gasoline and diesel. Any day where the price of natural gas declines and oil jumps, Wall Street is going to give shares of Clean Energy a boost -- even if there's no reason why those two commodities are moving in the way that they are.
There's also a little bit of optimism leading up to the company's earnings report this evening. Yesterday, the company announced that it was continuing to make progress on building out its infrastructure by announcing several smaller deals where the company will supply and maintain fueling equipment and natural gas to several clients in its three largest markets: public transit, long-haul trucking, and refuse collection.
Now What: From a long-term perspective, the crude oil and natural gas price-spread change in a single day means absolutely nothing. With oil and gas prices moving so wildly from day to day, Wall Street could turn right around and take those gains back. So don't let today's price swing alter your opinion on the stock.
The more important thing to watch here is the company's continued progress in signing deals like the ones outlined yesterday, and it's ability to turn that recurring revenue stream into a cash stream. Patient investors who have hung onto shares throughout the early times may need to wait a while longer before that day happens, but each new deal gets the company one step closer.