PG&E Is Being Replaced In The S&P 500 And Dow Jones Utility Average

The fall from grace continued for PG&E Corporation PCG after the stock got the boot from both the S&P 500 index and the Dow Jones Utility Average.

What Happened?

S&P Dow Jones Indices announced PG&E will be replaced in the S&P 500 by Teleflex Inc. TFX and will be replaced in the Dow Jones Utility Average by Sempra Energy SRE.

Why It’s Important

PG&E stock crashed another 52 percent Monday after the company announced it's preparing for a Chapter 11 bankruptcy stemming from its liability related to California wildfires in 2017 and 2018. On Tuesday, PG&E failed to make a $21.6 million interest payment on its 2040 bonds, a further indication that the end may be near for the troubled utility company.

PG&E stock traded lower by another 9.1 percent Wednesday morning, and the stock is down 86.8 percent overall in the past three months. PG&E’s market cap has plummeted from $25.2 billion to around $3.5 billion in that time.

S&P said in a press release its the company’s plan to file for bankruptcy by the end of the month, not its market cap, that precludes the stock from eligibility in its indices.

What’s Next?

At this point, PG&E investors’ last hope seems to be that the California state legislator will step in and bail out the company in some way that will preserve shareholder equity. On Monday, Governor Gavin Newsom said he and his team have been discussing the possibility of keeping PG&E solvent, but investors and S&P seem skeptical.

PG&E traded around $6.32 per share at time of publication.

Related Links:

Analyst Cuts PG&E Price Target By 50%, Remains Bullish On Underlying Fundamentals

PG&E Continues Fall After Credit Rating Cut To Junk Status

Photo credit: Frank Deanrdo, Flickr