NRG Falls to All-Time Low After Abrupt Exit of Longtime CEOby
Stock drops as much as 19.2 percent day after departure
Investors may be questioning company strategy going forward
NRG Energy Inc., the biggest U.S. independent power producer, fell to an all-time low after it announced the abrupt exit of David Crane, the company’s long-standing and high-profile chief executive officer.
NRG slid 18 percent to $9 in New York, the lowest since Dec. 3, 2003.
“Investors are saying, you’ve changed the top guy, but what are you changing about what you are going to do?” said Kit Konolige, an analyst for Bloomberg Intelligence. “I think investors are looking at this as being a very tough environment for power producers.”
Another power provider, Dynegy Inc., fell dropped 18 percent to $11.44, the lowest since Oct. 4, 2012.
NRG said Thursday that Chief Operating Officer Mauricio Gutierrez would replace Crane after the company’s stock tumbled 60 percent this year. Conventional power producers such as NRG are struggling to compete as a glut of cheap natural gas flowing out of shale formations has weighed on the price of electricity. At the same time, they are facing increasing costs to comply with new environmental rules.
Investors appear to have “limited confidence” in non-regulated generation owners because of weak commodity prices and competition from renewable energy sources and state-subsidized conventional power plants, Julien Dumoulin-Smith, a utility analyst with UBS Securities LLC, said Friday in a research note.
Natural gas, which sets the price of power in most markets, has fallen 24 percent this year.
In September, Crane, 56, said NRG was pulling back from its plans to transition from a traditional power provider to a clean-energy one and would instead focus on cutting costs, paying down debt and spinning off its home-solar business.
“We feel Crane was left in a bind due to the Home Solar situation this year and perhaps was being too ambitious with long-dated renewable projects in a weak commodity environment,” Tudor Pickering Holt analysts led by Neel Mitra said Friday in a research note.