Commerzbank, Thunder Gold, Plug Power – What happens after the US election?

Commerzbank - US election and its impact

The recent US elections put pressure on European bank stocks. In addition, the Federal Reserve cut interest rates again to support the economy and avert an impending recession. For the interest-sensitive Commerzbank, falling interest rates are not good news. However, the focus of attention is the possible takeover of Commerzbank by the Italian UniCredit. European regulators are signaling approval, while the German government as a shareholder is skeptical. UniCredit CEO Andrea Orcel sees a one-year window for a decision on a possible acquisition of Commerzbank.

On November 6, Commerzbank presented its quarterly figures and surprised on the upside. The Company reported a net profit of EUR 642 million, beating analysts' expectations. Revenues were around EUR 2.7 billion. By year-end, net interest income is expected to increase to EUR 8.2 billion, while net commission income is expected to improve by 5%. Nevertheless, a risk result of EUR -255 million weighed on the result, caused by larger individual cases and provisions for ESG risks. The cost-income ratio improved slightly to 58%, which keeps the bank on track to achieve its full-year targets.

Commerzbank is optimistic about the coming years. The updated strategy until 2027 plans a return on equity of 12.3% and a reduction of the cost-income ratio to 54%. A share buyback program of EUR 600 million has been approved, and a further tranche of EUR 400 million has been applied for. Additional details on the strategy for the coming years are expected at the Capital Markets Day at the beginning of next year. The stock price recently fell to EUR 15.805.

Thunder Gold - A rising star in the gold sky

The latest gold rally took the gold price to just under USD 2,800, and even though the strong US dollar is putting a damper on the rally, gold explorers are coming back into focus. Thunder Gold has made significant progress in exploring the Tower Mountain property in recent years. Since acquiring the property in 2020, the Company's experts have identified a promising gold deposit located on the western side of the Tower Mountain Intrusive Complex. To date, 41,000 m have been drilled, representing a CAD 12 million investment. Initial estimates suggest a potential of 1.25 to 1.5 million ounces of gold, but the Company sees far greater potential around the entire intrusive complex.

The Tower Mountain project offers a distinct advantage: excellent infrastructure. Its proximity to the city of Thunder Bay, a major port with direct access to the Trans-Canada Highway and a rail network, makes it possible to efficiently implement the mining of large tonnages of low-grade ore. This type of deposit is among the largest operating gold mines in the world because they are consistently productive despite their lower concentration of precious metals. The Company can rely on established infrastructure, which significantly reduces capital and operating costs.

The recent discoveries of high-grade gold occurrences in the P-Zone are a testament to the abundance and diversity of the mine's potential. Rock samples returned gold grades from 0.75 g to 13.4 g. Further results are expected during November. The plans for extensive exploration aim to reveal the true potential of the deposit, as only a fraction of the property has been explored so far. If the resource estimate continues to increase, it is only a matter of time before larger gold producers arrive on the scene to secure the property. The stock is currently trading at CAD 0.04, giving it a market capitalization of just CAD 8.3 million. This is a bargain, considering the previous resource estimate.

Plug Power – US election weighs on green tech sector

The election of Donald Trump as US president has put pressure on the green tech sector, including companies such as Plug Power. Trump's pro-fossil-fuel policies could hamper the progress of renewable energies. In particular, Trump intends to withdraw from climate change policies such as the Paris Agreement, which reduces government incentives for renewable energy. In addition, tariffs on imports, including solar panels from China, increase production costs and could weaken the competitiveness of companies such as Plug Power, which specializes in green technologies.

Plug Power has been struggling with declining revenues and losses in recent quarters. In the first half of 2024, the Company posted a negative operating cash flow of USD 422 million and a net loss of USD 558 million. Despite these challenges, the Company hopes for a turnaround in investor confidence. A potential positive impulse could be the final approval of a USD 1.66 billion loan by the Department of Energy to finance the expansion of hydrogen production facilities. These could help Plug Power to implement its plans without resorting to capital increases.

The question is whether this approval will be granted after the change of president. This uncertainty sent the stock on a renewed downward slide. The high short interest ratio of 27.8% indicates a significant level of pessimism that could already be priced in. A possible turnaround in market sentiment, which could trigger a short squeeze, would be possible with the quarterly figures on November 12. However, this is not likely given that the Company has regularly disappointed investors in recent years. An investment is currently highly speculative. The stock can currently be bought for USD 2.06.

After the US election under Trump, Commerzbank, Thunder Gold, and Plug Power face different challenges and opportunities. Commerzbank presented positive quarterly figures despite falling interest rates. At the same time, management is considering a possible takeover by UniCredit. Thunder Gold is profiting from the high price of gold, with exploration at Tower Mountain revealing great potential and strengthened by first-class infrastructure. Political developments in the US pose a threat to Plug Power. Nevertheless, the planned loan guarantee from the Department of Energy could provide new investment incentives, although this remains uncertain given the political instability.