Edison International Stock Nears Two-Year Low As Lawsuits Link Utility to L.A. Wildfires: Retail Fears The Worst
On Monday, the stock fell 11.89%—its steepest single-day decline since 2021. Since the wildfires broke out on Tuesday, Edison has lost more than 28% of its market value.
FollowEdison International (EIX) stock plunged over 11% in premarket trading on Tuesday following multiple lawsuits alleging that the company's equipment ignited the Eaton Fire, one of the wildfires still raging near Los Angeles.
If the premarket losses persist, Edison International shares will hit their lowest levels in over two years, last seen in November 2022.
On Monday, the stock fell 11.89%—its steepest single-day decline since 2021.
Since the wildfires broke out on Tuesday, Edison has lost more than 28% of its market value.
The lawsuits, filed Monday, accuse Southern California Edison, a subsidiary of Edison International, of sparking the blaze that devastated the Pasadena area, including the Altadena community.
Plaintiffs include homeowners, renters, and business owners whose properties were destroyed, according to Bloomberg. The report forecasts that these initial complaints could be followed by thousands more claims.
The lawsuits come after Edison International CEO Pedro Pizarro admitted in an interview with Good Morning America that the company could not "rule out" the possibility that its infrastructure played a role in the fires.
While Pizarro noted no electrical issues were detected on transmission lines near the fire’s origin, he acknowledged that inspection teams have been unable to examine equipment in the active fire zone.
Over the weekend, Southern California Edison filed two Electric Safety Incident Reports (ESIR), one of which reported damaged equipment at the Eaton Fire site.
However, the utility clarified that it remains uncertain whether the damage occurred before or after the fire started.
Edison International Sentiment and Message Volume on Jan.14 as of 7:50 a.m. ET | Source: Stocktwits
On Stocktwits, retail sentiment around Edison International dipped to ‘extremely bearish’ (5/100) – the lowest level seen this year – from ‘bearish’ a day ago, even as chatter surged to ‘extremely high’ levels.
Retail investors are divided on the implications of the lawsuits.
One user on the platform warned that investors should be careful that Edison doesn’t end up footing the bill for the L.A. fires, given that Governor Gavin Newson likes to “blame others” for issues in California.
Another user anticipates that the stock price could dip as low as $10 if Edison is found guilty of being responsible for the fires.
Others fear that the lawsuits won’t stop anytime soon. They anticipate litigation from most stakeholders, as well as the federal government. Moreover, liabilities won’t be capped if the courts rule ‘gross negligence.’
Edison International's stock has fallen over 19% in the past year, with much of the decline tied to concerns over wildfire-related liabilities.
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Read also: Edison International Stock Plunges As CEO Admits Uncertainty Amid Wildfire Liability Concerns: Retail Sentiment Hits Year-Low
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