Hawaiian Electric stocks have experienced a significant decrease of more than 60% following the devastating Maui wildfires that caused the loss of numerous lives and the destruction of the historic town of Lahaina last week.
The shares briefly rose by approximately 14% on Friday when Hawaiian Electric filed a report with the SEC, stating that they are seeking guidance from experts and are committed to staying in Hawaii for the long term, including the rebuilding process.
However, analysts predict that this increase in stock price will not be sustained.
“There is currently significant legal uncertainty surrounding the situation,” stated Wells Fargo analyst Jonathan Reeder in an interview with CBS News. “Given the extent of the devastation, Hawaii’s liability standards, and the outcome of similar wildfires in other Western U.S. states, it is highly unlikely that Hawaiian Electric will be able to avoid liability,” Reeder added.
In a recent report, Wells Fargo analysts declared that the primary power company in Hawaii is essentially worth zero dollars due to the increasing death toll, substantial property damage, and the immense suffering caused by the Maui wildfires.
Hawaiian Electric’s stock price dropped from around $17.68 to $8, and analysts believe that the economic losses will exceed billions of dollars, surpassing the company’s pre-wildfire equity value.
The cause of the wildfires has not yet been determined, but investigators are examining the potential involvement of downed power lines and decisions made by Hawaiian Electric. Claims have been made that the utility failed to implement necessary safety measures to mitigate wildfire risks. A spokesperson for Maui Electric stated that some precautions were taken to prevent fires before hurricane winds arrived.
The investigation may take months or even years to conclude, and it is believed that Hawaiian Electric’s insurance coverage may not adequately cover potential liabilities.
In a similar situation, California utility company PG&E filed for bankruptcy in 2019 after paying out approximately $25.5 billion for its role in wildfires caused by downed power lines in 2017 and 2018. PG&E also paid around $13.5 billion to wildfire victims following lawsuits and claims that their equipment sparked the most destructive wildfire in California’s history.
Emily Mae Czachor and the Associated Press contributed to this report.
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