How to Buy Gevo Inc. (GEVO) Stock

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Contributor, Benzinga
May 12, 2021

Gevo Inc. is an alternative fuel company that specializes in renewable gasoline and diesel, as well as sustainable aviation fuel. With a slate of new deals and partnerships in an industry that’s expected to double to more than $300 billion by 2030, GEVO quickly became a favorite among investors seeking out opportunities in sustainable energy. 

While that initial momentum has dropped, GEVO still boasts an optimistic future. Find out the latest news from Gevo Inc. and learn how to buy GEVO stock now.

How to Buy GEVO Stock Summary:

  • Choose a brokerage that offers low commission trades of equities.
  • Choose how many GEVO shares you want, based on your research into the stock, your risk tolerance and earnings goals.
  • Create your order, including any limits or other restrictions.
  • Execute the trade.

How to Buy Gevo, Inc GEVO Stock

If Gevo is one of your first investments, read through the steps below to learn how to buy stocks

  1. Pick a brokerage.

    The brokerage you choose matters because it influences what kind of equities you have access to, what kind of brokerage accounts you can open and how quickly your trades are executed. 

    For GEVO, you need a broker that allows you to trade stocks. If you plan to short it, make sure you check the margin account requirements before signing up. 

  2. Decide how many shares you want.

    Once you have an account, you need to decide how many shares you want. With stocks like GEVO that trade under $10 per share, you have a lot of flexibility. 

    If you’re confident in the stock or you have a specific trade move in mind, pick up hundreds of shares to maximize your profit.

    If you’re on the fence but you still want to invest, go for a smaller amount. Whichever way you lean, never invest more than you’re willing to lose.

  3. Choose your order type.

    The next step is to decide what kind of order you will place to actually buy the shares. To understand the different order types, you first need to learn what bid, ask and bid-ask spread mean. 

    Here are some quick definitions:

    Bid: This is the amount you offer to pay per share. 
    Ask: This is the amount a shareholder offers to sell their shares for.
    Bid-ask spread: This is the difference between the price a buyer offers and the price a seller accepts. 
    As a buyer, when trade volume is low, there can be a delay between when you place your order and when it actually executes. This can alter the price you end up paying. The longer that delay, the wider that bid-ask spread might be.
    Investors can minimize the risk of a runaway bid-ask spread eating their profits by placing orders with special conditions. The different conditions define the order types you can choose from. There are four main types:
    Market order: This is a basic order with no special conditions. The order just fills as soon as there are enough shares available to fill your order. Because there are no conditions, these orders tend to execute the fastest. However, they’re also most vulnerable to price fluctuations. If you place an order at $10 but shares don’t become available until the price hits $12, you end up paying an extra $2 per share.
    Limit order: With a limit order, buyers can put a maximum price on the order. For example, if shares of GEVO go above $15 before your trade is executed, the order automatically cancels. This minimizes your risk of paying more than you’re willing to for a stock.
    Stop-loss order: For short-term trades or higher risk stocks that you’re unsure about, you can put a cap on the risk you’re exposed to by putting a stop-loss on your order when you buy. A stop-loss won’t affect the price you pay. Instead, after you buy, the stop-loss can automatically trigger a sell order if the stock dips below the price you gave in the order. Say you buy GEVO at $10 per share. You can put a stop loss for $8 which would trigger an automatic sale if the price dips below $8. This means that the maximum risk you’re exposed to is about $2 per share, instead of the full $10.
    Stop-limit order: The risk of a stop-loss order is that the price continues falling rapidly after your automatic sell order is placed. You might trigger the sale at $8, but if there aren’t enough buyers, the trade might not execute until it’s down to $5. This is where a stop-limit comes in. For example, you can place a stop limit of $7. With this order type, you’re triggering a sale if the price dips to $8, but you’re automatically cancelling that sale if it continues to drop below $7 before executing. Then you can hold the shares and wait for a better opportunity to sell.

  4. Execute your trade. 

    Once you know the number of shares you want and the order type you’ll place, all that’s left to do is hit that trade button. Once you execute, your order will be filled as soon as shares are available. 

    For high liquidity stocks, this can happen in a matter of seconds or minutes. For low liquidity stocks, it can take longer.

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Gevo Inc. Stock History

GEVO 1 year overview from Benzinga Pro

The alternative-fuel company has had a lackluster past few years, but as the need for renewable fuels becomes increasingly urgent, interest in the company has notably increased. The company saw a major spike around August 2020 after news that Gevo had secured over $1.5 billion worth of long-term revenue contracts.

That upward momentum continued through January, peaking at over $15 per share by mid-February. After reaching that peak, GEVO shares began a sharp decline over the past couple weeks as concerns that its momentum was largely based in speculation. 

Pros to Buying Gevo Inc. Stock

While shares of GEVO have dipped in the past months, there are many reasons for optimism going forward. Some of the latest deals and partnerships Gevo Inc. has made this year will add a much-needed revenue boost in the coming months and years. 

Here are a few of the moves the company has made recently that could help send its price back up:

  • In February 2021, Gevo partnered with long-time customer HCS Group GmbH to develop a renewable hydrocarbon facility in Germany. Once the project is completed in 2024, the facility is expected to produce 22 million gallons per year of renewable fuels for airlines, cars and other transportation.
  • At least 5 million of that output will go to Scandinavian Airlines, thanks to a deal struck between the airline and Gevo. The $100 million contract commits Scandinavian Airlines to purchase at least that much sustainable fuel from Gevo each year.
  • The Biden administration's commitment to renewable fuel sources promises to boost the entire sustainable energy sector, including GEVO, over the next 4 years.

Cons to Buying Gevo Inc. Stock

Even with strong reasons for optimism, the worries about the price surge being driven by speculation are not entirely unfounded. Gevo’s current financials suggest it might still be overvalued given its current position:

  • Year-over-year revenue declined by 25.49%, contributing to the company’s negative net income for the year.
  • Analysts are increasingly concerned about how long the company can continue operating with the kind of steep losses it has been reporting the past 3 quarters.
  • Renewable energy is still a young market, and it’s unclear which resource will dominate in the coming decades. Gevo isn’t well diversified across renewable resources, so the company may not be viable if the market pivots away from the specific biofuels the company has supported.

Make GEVO Part of Your Impact Portfolio

While the company has made multiple deals to generate revenue in the next few years, GEVO’s high beta of 2.7 may make it too volatile for a buy-and-hold strategy. But for impact investors willing to wait a few years for the new hydrocarbon facility to open in 2024, patience could pay off. 

As a short-term trader, you could buy GEVO during this current dip to benefit from that volatility. However you decide to play it, start by opening an account with one of the best brokers for retail investors today.