Yahoo Finance Why PG&E Stock Popped 11% This Morning
What happened
The bad news surrounding PG&E Corporation (NYSE: PCG) -- the California electric utility at the center of controversy because of its role in last year's Camp Fire wildfire, as well as an apparent imminent bankruptcy case -- just keeps getting worse. Yesterday, S&P downgraded PG&E's debt from CC to D, or basically from "junk bonds" to "just plain trash." Today, analysts at RBC Capital Markets followed up with a reduction in their price target on PG&E stock: from $45 to ...
... just $8 even.
Despite all the negative news, PG&E stock jumped as much as 11% in early trading today and remains up 9.7% as of 11 a.m. EST. Why?
Don't be fooled by a sucker rally. The sun is setting on PG&E stock. Image source: Getty Images.
So what
Honestly, there doesn't seem to be a good reason for PG&E stock going up so much on no good news and more than a little bad news. My best guess at this point is that some investors who (rightly) predicted PG&E's downfall and shorted the stock are now collecting their winnings by buying back the shares -- which has the effect of bidding up the price of PG&E stock.
Now what
If I'm right about that, though, then the share price strength at PG&E won't last long. A higher price, but one unsupported by good news giving reason to believe PG&E shares will be worth anything after bankruptcy, is only going to attract new short-sellers to drive PG&E stock right back down again.
My advice? If you own PG&E stock, you've probably already lost a lot of money. Don't get suckered in by this latest rally and risk losing even more.
More From The Motley Fool
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.
