Summary
⚈ Red Eléctrica stock closed slightly higher despite the widespread power outage.
⚈ Unclear outage causes may lead to regulatory scrutiny and future investor uncertainty.
Spain’s power outage on Monday, April 28, caused a cascade effect, which saw parts of the grid shut down in Portugal, France, and Andorra as well, leaving roughly 60 million people without power for almost 18 hours.
According to Spanish Prime Minister, Pedro Sanchez, 15 gigawatts of power were lost in just five seconds, equating to roughly 60% of the entire country’s demand at the time during the ‘apagón.’
By press time on April 29, power had largely been restored. Although a definitive answer as to why it happened in the first place hasn’t been found, a cyber attack has been ruled out. While some experts are positing that a rare atmospheric phenomenon was to blame, Spain’s national power company, Red Eléctrica, does not believe that to be the cause.
Red Eléctrica also happens to be a publicly-traded company, and trades under the ticker symbol BME: RED, under the name of its parent company, Redeia Corporacion. Surprisingly enough, despite the scale of the outage, RED stock was relatively unaffected.
Power outage in Spain had little effect on Red Eléctrica stock— but it could see a drop in price going forward
Interestingly, Red Eléctrica stock actually closed 0.31% higher on April 28. At the time of writing, Red Eléctrica shares were changing hands at a price of €19.12, equivalent to roughly $21.76, some 0.47% lower than the levels seen before Spain’s power outage.
This does not necessarily mean that RED stock will not see a move to the downside in the coming days and weeks, however.
Since the exact cause of the blackout in Spain hasn’t yet been ascertained, there remains a possibility that it was caused by equipment malfunction or operational mismanagement — both of which would entail regulatory scrutiny, erode investor confidence, and potentially make the business liable for fines.
Featured image from Shutterstock
