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Why is Aemetis (AMTX) stock moving today?


Aemetis (NASDAQ:AMTX) today offers a new agreement with Jet Blue Airways (NASDAQ:JBLU). This morning, the renewable biofuels producer announced it would supply the low-cost airline with 125 million gallons of sustainable aviation fuel. Under the agreement, this fuel will be delivered throughout the next decade. Now the AMTX stock is on the move. Despite a tough season, the deal could also signal a turnaround for JetBlue.

Source: Pavel Kapysh / Shutterstock.com

AMTX stock has been going up and down since this morning’s announcement. First, Aemetis started the day jumping almost 2%. Of course, the shares fell before the end of the first hour of trading, but they rebounded soon after. As of this writing, AMTX is down slightly for the day. However, it may soon rise again.

However, the other part of this deal is not faring so well. JBLU stock started the day plunging more than 5%. Today, although trying to rebound, the title is in the red by more than 9%. That said, this drop is not due to the partnership, which could lift JBLU in time. On the contrary, bearish energy has surrounded the airline’s shares for months, even as travel restrictions have eased.

Let’s see what this partnership means for both companies in the future.

What’s going on with AMTX shares?

AMTX stock has been trading below $10 per share since last week. For investors who recall that it traded at more than double November’s, that doesn’t look good. However, this name must also be evaluated from a macro point of view. As an aviation fuel producer, the company was going to face a difficult industrial landscape due to Covid-19 cases no matter what. For example, the omicron variant defined much of late 2021 and early 2022, grounding many flights in the United States. Uncertainty drove down travel stocks across the board.

Now, however, Russia’s invasion of Ukraine is also pushing oil prices higher. This has led to further complications for the sector. However, things can swing in favor of a company like Aemetis.

Going forward, airlines will shift to more sustainable fuel options due to rising oil prices. Travel demand will likely be high this summer as well, as long as Covid-19 cases remain at current levels. As airlines look for other ways to refuel their jets to meet demand, they will look to companies like Aemetis. The company said the following in its transaction announcement:

“Sustainable aviation fuel offers significant environmental benefits over petroleum-based jet fuel, including a reduced lifecycle carbon footprint and reduced contrails. The sustainable aviation fuel blend that will be supplied in part of this deal is 40% SAF and 60% Petroleum Jet A to meet international blending standards.”

What this means

Looking ahead, JetBlue is wise to contract with Aemetis now. The agreement will help JBLU save on fuel costs as oil prices continue to rise. This, in turn, will help it keep ticket costs relatively low. The deal is particularly noteworthy for investors, as other airlines may soon follow.

Aemetis has fallen significantly since 2021, losing more than 50% from its peak in November. This makes it a great buying opportunity before new demand for sustainable fuel sends more airlines flying.

At present, AMTX stock remains an undervalued small cap play. Investors should watch it carefully as the travel industry landscape shifts in its favor.

At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

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