Why is Meridian Energy [NZX:MEL] Down by Over 7% Today?

Meridian Energy Ltd [NZX:MEL] has fallen by 7.84% in trading today, down to $4.995 at the time of writing.

Meridian is one of New Zealand’s largest electricity generators. It has a prominent presence in the renewable-energy market, operating a mix of hydro and wind power.

Meridian currently has a market cap of $12.8 billion.

Why has the [NZX:MEL] share price plunged?

Market sentiment has turned bearish. This is because Rio Tinto [ASX: RIO] is currently reviewing its aluminium-smelter plant at Tiwai Point.

Some key takeaways:

  • Tiwai Point is hungry for power. It consumes over 14% of New Zealand’s total energy supply.
  • If Rio Tinto decides to shut down the plant, 1000 jobs in Southland could be at risk.
  • The energy industry has been affected by the bad news. Over $1.5 billion in stock value was wiped out because of this.
  • Meridian has suffered the most because it was the largest supplier of electricity to Tiwai Point.

Where could Meridian Energy go from here?

There is a feeling of grimness among analysts.

No final decision on Tiwai Point will happen until early 2020. But investors are already bracing themselves for the worst-case scenario.

The sentiment will be negative for the short- to medium-term.


John Ling,
Contributor, WealthMorning.com

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John is the Chief Marketing Officer at Wealth Morning. His responsibilities include marketing, customer service, and compliance. He is an experienced investor and portfolio manager, trading both on his own account and assisting with high net-worth clients. In addition to contributing financial and geopolitical articles to this site, John is a bestselling author in his own right. His international thrillers have appeared on the USA Today and Amazon bestseller lists. John is a shareholder of Wealth Morning.

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