PG & E plunges over 25% on fears it could face $ 18 billion in damages

P & C plummeted on the face of a jury may have decided that the company should pay up to $ 18 billion in damages to wildfire victims.

The California supplier of gas and electricity fell to $ 10.05 – about 30% – on the week's first day of trading before losing one-day losses to about 27%. The plunge represented its worst day on Wall Street since PG & E first announced plans to file for bankruptcy in January.

U.S. Bankruptcy Judge Dennis Montali on Friday said that PG & E is responsible for the 2017 Tubbs fire, which killed 22 people and destroyed more than 5,600 buildings.

That fire, the second-most destructive in the state's history, preceded the 2018 Camp Fire, which became California's worst. PG & E is also facing responsibility for that blaze.

"Looking forward to the next legal steps," said the Fire Safety Board, "The reason for the 2017 Tubbs Fire was not related to PG & E equipment," said PG & E in an emailed statement. "PG & E has made significant progress in further refining a viable, fair, and comprehensive plan of reorganization that will compensate wildfire victims, protect customer rates, and put PG & E on a path to be the energy company and customers."

Still, Montali's decision was enough to spark investors across Wall Street, with badysts like Citi's Praying Mehta categorizing the development as "too risky."

"Even though Calfire had clearly noted that PG & E equipment was not included in the Tubbs fire, we think that a jury trial is a lot of other dynamics in play, especially given PG & E's history of poor safety and operational culture," on Monday, downgrading the stock to a sell rating.

The decision marks a critical development for PG & E, which has been thought to be the subject of responsibility for the investigation of the results of a private electrical system. The company did, however, manage to retain control of its multibillion-dollar bankruptcy plan, a win for the company in the face of growing investor angst.

PG & E filed for Chapter 11 in January, facing up to $ 30 billion in potential wildfire liabilities.

"This risk of a significant liability for the PCG story," Mehta added. The badyst believes the company is worth $ 4 per share, less than half its current value.