Shares of Velocys PLC (LON: VLS) are down 35% in 2021 and are stuck in a range stretching out for months, as shown in the chart below. Can they break out of the range and rise?
The sustainable fuels company’s shares have been range-bound since July 2020, except for a break higher that lasted just over two weeks from late December 2020 to mid-January this year.
Velocys aims to develop sustainable fuels for the airline and heavy transport industries, creating the proprietary Fischer-Tropsch (FT) technology, which converts biomass to jet fuel and has already built a demonstration facility in Tokyo, Japan.
The company recently signed a collaboration agreement with Toyo Engineering Corporation of Japan to extend its cooperation and build a commercial scale biomass-to-jet-fuel project.
The two companies worked together in 2020 to deliver the demonstration facility in Tokyo, and Toyo plans to license Velocys technology exclusively and use the firm’s technical expertise to build the new plant.
The project will involve multiple Japanese partners introduced by Toyo and is aligned with the Japanese government’s goal of reducing carbon emissions from fuels. Still, Velocys’ shares did not post significant gains after the announcement and could not break out of the current range.
It seems like investors are unconvinced that Velocys technology shall gain a strong foothold in the industry and maybe even replace the current airline fuels given the lacklustre performance of its shares this year.
Velocys needs to do more to convince its shareholders and the broader markets of its technology’s viability and its future potential to revolutionise the airline fuel industry. Until then, the company’s shares are likely to keep performing poorly.
Velocys share price.
Velocys shares are down 35% in 2021 and are stuck in a multi-month trading range, can they breakout?