Clean Energy Fuels (NASDAQ:CLNE) which is a producer of renewable and natural-gas fuels for vehicles has been one stock that has been beaten in the long term. In the past 10 years the stock has lost around 86.6% of its value.
Natural gas fuel is important in reducing emissions
One may wonder why natural gas fuel yet there are a lot of oil-based fuels including green options as well as zero-emission battery tech. But for heavy-duty trucks such options are not feasible and they don’t exist.
Natural gas is cheaper and a cleaner form of energy compared to oil and companies have been looking to minimize emissions from their fleet so they prefer this alternative. This is an opportunity for Clean Energy Fuels that deals in liquefied natural gas and compressed natural gas.
Redeem fuel growing in popularity
Similarly the company has created Redeem which is a natural and renewable gas-based fuel that they make from landfills, organic waste, and wastewater. The fuel produces 70% less emission compared to diesel and it is also cheaper. Redeem has become popular and last year sales grew by 30% with the company signing a contract with UPS. The popularity of these clean energy forms is likely to continue.
However the decline in Clean Energy’s revenue is due to the falling natural gas prices. With Redeem becoming popular the company could make more sales and boost its revenue. Last year the company scored a tax credit of $60 million for natural gas which will extend to 2022.
Although the company has been growing its station count and fuel volume it has been experiencing declining revenues and was only profitable in Q4 last year. Despite the company being cash flow positive in the last four years it is unclear how the pandemic will affect it. Low oil prices could also hinder the adoption of natural gas fuel and there is also the advancement of battery technology.