Vertex Energy stock

Here’s why Vertex Energy stock (NASDAQ:VTNR) is up 300% this week?

Vertex Energy Inc (NASDAQ:VTNR) has continued its stellar run this week now up 331% for the week. The company announced last week that they are planning to acquire the Mobile refinery located in Mobile, Alabama from Equilon Enterprises for $75 Million. The acquisition will transform the company into a Leading Independent Refiner of Renewable and Conventional Products.

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So why is this a big deal for VTNR shareholders?

The acquisition is forecasted to drive strong revenue into the business. Vertex will spend $85 Million on a capital project designed to modify the Mobile refinery’s hydrocracking unit to produce renewable diesel fuel by the end of 2022. The adjusted refinery is expected to generate $3 Billion in annual revenue and $400 million of gross profit by 2023. In addition, the purchase aligns with the companies strategic goal in “clean” refining.

“Not only will this project fundamentally transform the profitability profile of the Mobile refinery, it also positions Vertex to further its objective of developing high-purity refined products and alternative feedstocks that support the global transition toward low-carbon energy alternatives.”

stated Benjamin P. Cowart, President and CEO of Vertex.

A look into the potential of the Vertex Energy acquisition

In the first quarter of 2021, the company generated $58 Million in revenue. If we look back at previous quarters, the company has continued strong revenue growth for three straight quarters. The average revenue forecast from analysts for 2022 is just north of $230 Million.

Therefore, an expected $3 Billion contribution from the refinery will blow the current revenue numbers out of the water in 2023. Hence, we can attribute VTNR’s strong price growth to long term bulls buying into the potential of this deal. However, the deal is expected to take place in Q4 of 2021 and speculation surrounding the deal may cause additional volatility in the stock price.

Written by Tyger Fitzpatrick, Founder of Youth Investment Group.

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