Why PG&E Stock Just Dropped 10%

What happened

PG&E Corporation (NYSE: PCG) shares are in retreat once again on Thursday -- down 10% as of 1:55 p.m. EDT. Once again, fire is the reason.

In California, the Kincaid wildfires in Sonoma County have cut power to some 200,000 souls and forced residents to evacuate their homes north of San Francisco. PG&E is responding to the blaze by announcing a "Public Safety Power Shutoff (PSPS) in 15 counties in the Sierra Foothills and North Bay -- Alpine, Amador, Butte, Calaveras, El Dorado, Lake, Mendocino, Napa, Nevada, Placer, Plumas, Sierra, Sonoma, Tehama, and Yuba -- impacting about 178,000 customers in those areas" -- explaining some but not all of the power outages.

Furthermore, PG&E is warning that "it is possible that additional customers not impacted by PSPS may experience power outages due to PG&E equipment damaged during the wind event." Power lines against a sunset.

Image source: Getty Images.

So what

Is any or all of this really PG&E's fault? It's hard to say, but given the close association between "fire," "PG&E stock," and "lawsuits" in many investors' minds these days, any bad news concerning one of the three seems to quickly spread to affect the other two.

Now what

What's more, there's also a business reason for the pessimism: Power shut off by PG&E is power not sold by PG&E to its customers -- resulting in revenue losses for the company. Until a permanent solution is found to the problem of wildfires periodically incinerating the state, I imagine that PG&E stock is going to be a tough utility to own.

10 stocks we like better than PG&E
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and PG&E wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 1, 2019


Rich Smith has no position in any of the 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.

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More