VPU - NEE Stock: The $2 Billion Reason NextEra Energy Is Stumbling Today
2024-06-18 09:44:10 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
NextEra Energy (NYSE: NEE ) stock is trending on social media and business news websites, and its shares are down about 4% in early trading. The company plans to sell $2 billion of equity units. NextEra owns the nation’s largest electric utility, Florida Power & Light, and sells large amounts of electricity derived from renewable sources. In fact, the company owns more renewable energy assets than any other firm in America.
NextEra’s Plan
The purchasers of the company’s equity units, which will be sold for $50 each, will be required to buy NEE stock by June 2027.
NextEra reported that it would use the $1.94 billion proceeds from the deal to bankroll “energy and power projects and for other general corporate purposes.” It also noted that it would use a portion of the funds to reduce its current debt load.
NextEra recently reported that it intends to spend $12 billion on solar energy systems and $1.5 billion on battery storage projects between 2024 and 2027.
Investors Have Been Upbeat on Electric Utilities
The shares of many electric utilities have rallied significantly this year, driven by forecasts for meaningful increases in electricity demand going forward. Specifically, investors believe that the expansion of data centers driven by increased utilization of artificial intelligence ( AI ) will increase electricity consumption.
According to many experts, the electrification of transportation and increased manufacturing in America will be among the other positive drivers of electricity consumption going forward.
The Vanguard Utilities Index Fund ETF Shares (NYSEARCA: VPU ) has risen nearly 10% so far this year.
The Price Action of NEE Stock
In the three months heading into today, the shares had advanced 20% in the last three months, and they were up 19% so far in 2024. However, they had fallen 4.7% in the preceding month.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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