Why Vistra Stock Jumped 28% in November

Shares of Vistra (VST 4.64%), a notable unregulated utility, experienced a significant rise in November, making it the top-performing stock within the S&P 500 index this year. Investors responded positively to its recent earnings report, and the stock also benefitted from investor sentiment surrounding the U.S. presidential election.

Data from S&P Global Market Intelligence shows that Vistra's stock concluded the month with a remarkable 28% increase. Initially, the stock faced a downturn early in November but managed to bounce back strongly.

Vistra's Rising Momentum

The growing enthusiasm for Vistra has been driven by perceptions of its potential to excel during the AI boom, especially as the demand for power is expected to surge with the rise of new data centers. As an unregulated utility, Vistra stands well-positioned to benefit from this increasing power demand.

However, the month started with a bit of a struggle for Vistra, as it saw a drop following news that a regulatory body rejected an agreement between Amazon and Talen Energy regarding a data center in Pennsylvania. This news led to declines across several utility stocks, including Vistra. Nonetheless, Morgan Stanley termed this situation an “excellent buying opportunity.”

After this initial dip, Vistra's stock rose 3.4% following the election, and it soared an additional 7% the next day after the company reported better-than-expected results for its third-quarter earnings.

In its earnings report, Vistra reported an impressive revenue of $6.29 billion, showing a remarkable 54% increase compared to the same period last year, significantly surpassing analysts' expectations of $5.01 billion. However, the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased from $1.61 billion to $1.44 billion. This decrease was attributed to reduced summer scarcity pricing in Texas and increased supply costs. Moving forward, Vistra provided guidance projecting a gradual rise in EBITDA from $5 billion in 2024 to between $5.5 billion and $6.1 billion in 2025, reaching over $6 billion by 2026.

Future Outlook for Vistra

Looking ahead, it seems likely that Vistra will continue to align with the overall trends in the AI sector, as much of its market value hinges on the potential advantages linked to AI development. The prospects for tax credits associated with nuclear production may also boost expectations regarding the use of nuclear energy for data centers.

Even if there aren't significant advancements in nuclear energy, Vistra is expected to gain from the growing demand for power as the AI sector rapidly expands. Nevertheless, the stock's remarkable rise throughout the year has largely been fueled by the broader narrative surrounding AI.

Vistra, Stock, Earnings