NEXT

NextDecade ($NEXT) CEO and Director Buy $5.67M Amid Downgrade...Strong LNG Business Confidence Signal

09/16/2025 12:20

NextDecade ($NEXT) has caught market attention as both its CEO and a director made substantial stock purchases on September 12. CEO Matthew Schatzman bought 281,500 shares at an average price of $7.14, investing a total of $2.01 million, while Director William Vrattos purchased 500,000 shares at an average price of $7.31, executing a $3.66 million transaction. NextDecade is an LNG specialist developing the Rio Grande LNG project in Texas. This large-scale facility, with an annual production capacity of 17.61 million tons of LNG, holds strategic importance in line with the US policy to expand LNG exports. The company recently made a final investment decision on Train 4, accelerating business expansion. The insiders' purchases are particularly significant given current market conditions. NextDecade's stock price has been declining steadily from its July peak near $12 to the current $6-7 range. The pressure intensified when Morgan Stanley recently downgraded the stock to 'Equal-weight' and slashed the price target from $15 to $10. Morgan Stanley cited disappointing financial outlook following the Train 4 final investment decision and high financing costs as reasons for the downgrade. While analysts expected approximately $1 billion in annual cash flow from five trains, concerns arose as sales and purchase agreement rates for Trains 4 and 5 were revised down to $2.54 per mmbtu. However, the simultaneous large-scale purchases by the CEO and director directly counter this pessimistic market sentiment. CEO Schatzman's personal investment of $2.01 million demonstrates strong confidence in the company's long-term prospects. Insiders are better positioned than external investors to assess the company's true value and future plans, making their buying actions often viewed as bottom signals. The LNG market environment is also working in NextDecade's favor. Saudi Aramco has signed a 20-year LNG supply agreement with NextDecade, and long-term demand securing is proceeding smoothly. The company has also consecutively signed long-term supply contracts with major energy companies including Japan's JERA, France's TotalEnergies, and US-based EQT, enhancing business stability. Key indicators for investors to watch include construction progress of Trains 4 and 5 and additional supply contract signings. Currently, Trains 1 and 2 are 48.3% complete, while Train 3 is 22.7% complete. With the final investment decision on Train 4 confirmed, initial LNG production is expected to begin around 2027. Risk factors include potential federal regulatory approval delays and construction cost inflation pressure. There's precedent from August 2024 when a federal court revoked Rio Grande LNG project approval, creating ongoing regulatory risk. However, the company has continued construction through active legal responses, and recent positive signals include FERC staff recommending final environmental approval. Short-term factors affecting the stock include natural gas price volatility and seasonal demand patterns. Rising natural gas prices due to increased winter heating demand and LNG export expansion would benefit LNG companies like NextDecade. Long-term prospects are supported by growing global LNG demand and US energy export expansion policies. Europe's efforts to reduce Russian gas dependence and continued LNG demand growth in Asia are structural factors supporting NextDecade's business model. While insider trading doesn't always guarantee stock price increases, simultaneous large-scale purchases by both CEO and director are clearly positive signals. The insider buying amid weakened market sentiment following Morgan Stanley's downgrade carries even greater significance. Investors should closely monitor upcoming earnings reports and additional supply contract announcements.