Personal Finance

Why Dynegy Inc Shares Popped 29% in May

Power plant shown at sunset.

What happened

Shares of independent power producer Dynegy Inc (NYSE: DYN) jumped 28.8% last month, according to data provided by S&P Global Market Intelligence , after rumors flew that the company was going to be taken over.

So what

On May 19, the stock popped after The Wall Street Journalreported (linked article requires subscription) that Vistra Energywas in talks to buy Dynegy . And some analysts even thought the bid could go into the mid-teens because Dynegy is one of the biggest power producers in the country.

Power plant shown at sunset.

Image source: Getty Images.

What's strange about the rumored buyout is that nothing has been said since. Neither company has commented, and it's now been nearly a month with no news.

Now what

This is why it's not wise for investors to bet on rumored buyouts, because that's all they are: rumored. That isn't to say that Dynegy won't eventually be bought out, but if it turns out the rumor isn't true, those big gains could be lost. The stock has already given up some ground, and if the company doesn't find a deal soon, shares could continue to pull back. In a rough wholesale electricity market, Dynegy stock may have a lot to lose.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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