Orsted share price collapsed by over 17% today, August 25, reaching its lowest level in years. It was trading at DKK 180, down by over 86% from its all-time high of DKK 1,335 and bringing its market capitalization to DKK 53 billion or $8.3 billion.
Why Ørsted share price has collapsed
Orsted stock price has been in a strong downtrend in the past few years as sentiment in the wind energy industry worsened. The situation became more complicated in 2022 as central banks hiked interest rates to deal with the elevated inflation.
The current Orsted share price crash happened after the U Department of the Bureau of Ocean Energy Management (BOEM) stopped its ongoing project through it subsidiary Revolution Wind.
This is a major development that started last year following the approval of a BOEM loan as part of Joe Biden’s infrastructure spending package. It has a 20-year power purchase agreement to deliver power to Rhode Island and Connecticut.
Read more: Orsted shares plunge 27% as US wind project sale collapses, $9.4B rights issue announced
The Trump administration’s decision to halt the project stems from his dislike of clean energy projects and the fact that he received millions of dollars in campaign contributions from the fossil fuel industry.
Still, there is a likelihood that the company will sue to have the project restarted since it is about 80% complete, with all offshore foundations installed and 45 of the 65 turbines installed. The company said:
“Ørsted is evaluating all options to resolve the matter expeditiously. This includes engagement with relevant permitting agencies for any necessary clarification or resolution as well as through potential legal proceedings.”
The Resolution project is another major challenge facing Orsted. It ended its Ocean Wind 1 and 2 projects in New Jersey citing the elevated costs.
Orsted has other pressing challenges
Meanwhile, the Orsted share price has crashed after the company launched a $9.4 billion rights issue to fund its Sunrise projects in the United States. It did that after failing to find a buyer for the project.
These news events come after the company published encouraging financial results. Its revenue rose by 11% to DKK 37.8 billion, while its EBITDA jumped by 10% to DKK 15.5 billion. Also, the net profit rose to over DKK 9.1 billion.
Orsted stock price analysis
Orsted share price chart | Source: TradingView
The Orsted stock price has been in a strong downward trend in the past few years. It plunged to a low of DKK 176, its lowest level in years. Most notably, the stock moved below the key support at DKK 246, its lowest level in 2023 and January this year. Moving below this level invalidated the bullish triple-bottom chart pattern.
Therefore, the most likely scenario is where the stock remains under pressure for a while. It will then bounce back in the coming weeks as the company addresses the Revolution Wind project stoppage, either through negotiations or legally.
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