With the current financial market, clean energy stocks are facing major challenges and experts say issues may persist.
According to a CNN report, the iShares Global Clean Energy exchange-traded fund dropped 27% this year, while the MSCI All-Country World index, in comparison, gained 15%.
“Plug Power shares have slipped 63% this year, Enphase Energy shares have plunged 60%, SolarEdge Technologies shares have declined 71% and NextEra Energy shares have slid 29%,” CNN adds.
Renewable energy stocks have been experiencing a decline due to rising interest rates and supply chain disruptions – despite the Biden administration’s promises to invest more in climate projects.
And while some investors show interest in buying shares in sustainability-driven companies, aggressive interest rates make it challenging for them to maximize returns.
According to experts, high rates will persist – at least through the first few months of 2024 – which would cap earnings for such companies. Because they’re still part of a developing industry, clean energy companies usually trade on future earnings potential.
However, experts argue that clean energy stocks remain relatively pricey compared to their “current balance sheets,” CNN writes, adding that investors have also noted that the slow energy transition weakened their enthusiasm for investing.
