NFE Bearish Setup: Time to Consider Puts?

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NFE's technical outlook is decidedly bearish. The stock has experienced a significant downtrend over the past 90 days, plummeting from approximately $3.00 in late June to $1.355 as of November 4, 2025. The price is trading well below its 50-day SMA of 2.00 and its 200-day SMA, which is significantly higher at 5.41, confirming the downtrend. Momentum indicators signal continued weakness; the RSI is at a very low 29.98, indicating oversold conditions, although it could also reflect sustained downward pressure. The MACD is negative (-0.237) and diverging further from its signal line, reinforcing the bearish sentiment. The stochastic oscillator is also extremely low at 3.26, further suggesting oversold conditions, but not necessarily an imminent reversal. Recent price action confirms this bearish view with large volume on the most recent down day. Overall, the indicators suggest continued downward pressure on NFE in the short to medium term.

New Fortress Energy's (NFE) MD&A paints a concerning picture of its current financial health. For the six months ended June 30, 2025, `Net Sales` for the Terminals and Infrastructure segment decreased by $338.0 million compared to the same period in 2024. The consolidated `Gross Profit` margin was $25.1 million for the six months ended June 30, 2025, significantly lower than the $454.7 million for the same period in 2024. The `Net cash used in operating activities` was -$384.2 million for the six months ended June 30, 2025, a stark contrast to the $163.0 million provided by operating activities in the prior year. Management states that 'our current liquidity and forecasted cash flows from operations are not probable to be sufficient to support, in full, its obligations as they become due, and there is substantial doubt as to the Company’s ability to continue as a going concern'. Several factors contribute to this bleak outlook, including operating losses, negative operating cash flows, reduced earnings following the sale of the Jamaica Business, increased interest expense, and cash tax payments. Furthermore, NFE is facing potential non-compliance with financial covenants and the risk of debenture holders declaring an event of early maturity, which could trigger acceleration of substantially all of its outstanding indebtedness. The company is exploring strategic alternatives, but success is not assured.

The earnings call projects a moderately bullish outlook, driven by strategic asset sales and a focus on long-term, stable cash flows. Core earnings are 'very much in line with expectation,' and management anticipates EBITDA plus gains to be '$1.25 billion to $1.5 billion for the year,' exceeding previous estimates. A key highlight is the Jamaica sale, closing at $1.055 billion and generating $800 million in net proceeds and a $430 million gain. The company is prioritizing simplifying the balance sheet by shifting towards asset-level financing and extending debt duration. They aim to match long-term supply contracts with FLNG unit performance and long-term demand, projecting $500 million in annual margin from these assets. Brazil remains a significant growth area, with power plants nearing commercial operation and long-term, inflation-linked contracts secured. While a capacity auction in Brazil was delayed, the underlying need for power remains, and the company is positioned to participate. The company ended Q1 with a strong liquidity position of $448 million in cash and $275 million available under the revolving credit facility.

NFE's financial performance reveals a concerning trajectory. Revenue decreased from $690.3M in Q1 2024 to $301.7M in Q2 2025. The `grossProfitRatio` also deteriorated significantly, starting at 0.557 in Q1 2024 and plummeting to 0 in Q2 2025. This indicates a severe erosion of profitability. Operating cash flow has been highly variable, with the most recent quarter showing a substantial cash outflow of -$352.5M. The company's solvency is a major concern, as `totalDebt` has increased from $7.73B in Q1 2024 to $9.41B in Q2 2025, reflecting increased leverage and potential financial strain. The net income also dropped drastically from $54.1M in Q1 2024 to -$555.1M in Q2 2025. These factors collectively paint a bearish picture of NFE's near-term financial health.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.