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.

Regards,

John Ling,
Contributor, WealthMorning.com


John looks after marketing and compliance at Wealth Morning. He has worn many hats, working as a customer-service rep, captioning producer and editorial assistant. He now finds his niche in the area he’s most passionate about: digital publishing. In his free time, he’s a novelist, and his books have appeared on the USA Today and Amazon bestseller lists.


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