RWE stock price

[Samir 1]

What is the latest concerning the RWE stock? I’ve seen that the stock price surged recently but not sure what’s the background of that.

[Tarik]

Hi Samir, thanks for the question. 

Shares of RWE AG (ETR: RWE) have performed positively in the past few weeks. The stock price gained more than 13% in May to trade at a 3-month high. 

Therefore, the RWE stock price traded briefly above the 30.00 mark for the first time since the first week of March. 

The RWE stock was always positioned to recover faster. Unlike some other stocks that lost 60%-70% during the COVID-19 market selloff, RWE stock price declined “only” 40% in February and March. 

The buyers are now eyeing a trip to 34.50, which comes around 15% higher compared to the current market price. If hit, this will represent a new 7-year high for shares of RWE AG. 

The positive performance was a result of the energy giant posting a very good first quarter, despite the coronavirus pandemic.bRWE announced a jump of the first-quarter profits by 19% to $1.41 billion.

“On our side the power generation business has very limited impact from the corona situation. Of course, we see muted power demand but usually our positions are hedged very well in advance and that is why we have seen, so far, very limited impact.”

Unlike some other companies that are decreasing its capital expenditure budgets, RWE reiterated it will continue with its planned investment of 5 billion euros to further expand its renewables portfolio.

However, the energy giant is also facing some headwinds. Naturstrom, a Germany-based energy retailer and 10 other energy companies started legal action against RWE. The subject of the legal action is RWE’s proposed $45 billion mergers with E.ON’s conventional and renewable generation assets. 

“By waving through the deal between RWE and E.ON to split up the energy market without serious conditions, the Commission has abandoned the goal of fair competition in the German and European energy market. That is a backward role, considering that the same commission has been pursuing liberalization of the electricity market for over 20 years,” said Dr. Thomas Banning, CEO of Naturstrom.

The lawsuit is made on Article 263 of the Treaty on the Functioning of the European Union.