Dow Stock Rebounds On $2.4B Deal With Macquarie: Retail Optimistic

Dow Inc.'s shares gained over 3.5% in morning trade on Monday, rebounding after four consecutive sessions of losses. 

The uptick came after the chemicals major announced a partnership with Macquarie Asset Management to form Diamond Infrastructure Solutions, a joint venture focused on Gulf Coast infrastructure assets.

Dow Inc, also known as Dow Chemicals, stock price movement year-to-date. | Source:TradingView

As part of the deal, Macquarie will acquire a 40% equity stake in selected U.S. Gulf Coast infrastructure assets for approximately $2.4 billion in initial cash proceeds. Dow could receive up to $3 billion if Macquarie increases its stake to 49% within six months.

Dow CEO Jim Fitterling emphasized that the transaction is designed to improve operational efficiencies and unlock growth potential. Dow will remain the majority owner to maintain control over operations.

Meanwhile, Diamond Infrastructure Solution will comprise non-product-producing assets, including power production, pipelines, and environmental operations. These assets span five manufacturing sites – Freeport, Texas City, and Seadrift in Texas, as well as Plaquemine and St. Charles in Louisiana.

Dow Sentiment and Message Volume on Dec 9 as of 10:30 a.m. ET | Source: Stocktwits

Retail sentiment around the stock improved to ‘bullish’ from ‘neutral’ a day ago, with a noticeable uptick in chatter to ‘high.’ 

Some users on Stocktwits anticipate that the ease of doing business will likely improve once President-elect Donald Trump takes office in January, which will benefit the company. 

Despite Monday’s bounce, Dow shares are still trading significantly below their annual high of $60.69, marking a year-to-date loss of over 21%.

Dow has faced headwinds throughout the year, including weakened demand in key markets such as Europe and China. An unplanned cracker outage at its Texas processing facility in late July also disrupted production and impacted profitability.

The company’s revenue for the twelve months ending Sept. 30, 2024 stood at $43.18 billion, representing a 5.84% decline year-over-year. This follows a more considerable decline of 21.58% in annual revenue from 2022 to 2023.

For the full year, the company projects revenue between $30.7 billion and $30.9 billion, with adjusted earnings per share (EPS) expected between $5.31 and $5.51.

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