This is Not investing advice. Just my personal views.
CLNE peeped over $9 on Thursday and tested $11 on Friday. While the stock faded intraday it is important for all shareholders to remember why they own this name and to keep an eye on the long term. Some may be tempted to sell into the pop. Some might not trust the Reddit Apes. But trying to trade any short term movement I feel is missing the forest for the trees. The long term potential for CLNE remains huge.
Remember what CLNE has built. It is the undisputed leader in RNG fuelling infrastructure. It runs an integrated upstream + downstream RNG platform that has taken years to build and is hard for others to replicate at this point. It has an enviable roster of fleet customers all of whom see CLNE as a partner of choice.
Lets start with CLNEs formidable downstream business. CLNE has built 550 strategically located fueling stations which support big trucking fleets, all of whom are nowadays committed to reducing their carbon footprint. CLNEs big customers like AMZN are dependent on CLNEs infrastructure to deliver RNG where and when they need it. So they are happy to lock themselves into long term offtake agreements which guarantee their fleets reliable RNG supply.
CLNE wins because the offtake agreements = predictable demand. And predictable demand in turn supports the lucrative upstream business. With clear sight of the RNG demand from its long term partners, CLNE can underwrite big capex investments in methane capture + RNG conversion projects. Without this secured demand these capex projects would be much riskier to undertake. But with the RNG demand already effectively secured CLNE has derisked its investment in its growing RNG production footprint.
The big integrated oil majors get this. BP Total Chevron have all partnered with CLNE because they do not have the expertise or the downstream infrastructure to go it alone. They see no reason to replicate CLNEs fueling station network or compete for partnerships from the likes of AMZN so instead they have partnered on the upstream side of things. CLNE had to share upstream economics on new projects, but they get significant $ in return to accelerate their business towards RNG self-sufficiency. Very soon 100% of the RNG sold by CLNE at its fuelling stations will be “home made” RNG with superior economics vs CNG or RNG purchased from 3rd parties.
Remember all of this if and when CLNE resumes its ascent. You do not own this stock for a short term pop. You own it because the company has a head start in an exciting renewables space that may seem niche today (relative to solar or wind) but is well positioned to play an important role in the inevitable energy transition our societies need to embrace.
Long live Cow Farts. RNG is part of the solution. Good luck to all CLNE shareholders.
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