NEXT

NextDecade ($NEXT) CEO Deploys $2M in 'Bottom Buying'...Reversal Signal After 45% Plunge?

09/19/2025 12:35

NextDecade ($NEXT) is capturing investor attention as company executives sent strong buying signals following a 45% stock decline over the past two months. NextDecade is a small-cap LNG developer building the Rio Grande LNG terminal in Texas. With a current market capitalization of $1.7 billion, it has been positioned as a key beneficiary of the U.S. LNG export boom. The company has signed 20-year long-term supply contracts with global energy giants including Saudi Aramco, TotalEnergies, and Japan's JERA, accelerating project commercialization. However, shares plummeted from $12.00 on July 18 to $6.53 on September 17. The direct catalyst was Morgan Stanley's September 12 downgrade from 'Overweight' to 'Equal-weight' and price target reduction from $15 to $10. Analysts cited disappointing financial outlook following the Train 4 Final Investment Decision (FID) announcement. Precisely at this moment, massive insider buying emerged. CEO Matthew Schatzman purchased 281,500 shares at an average price of $7.14 on September 12, investing $2 million. Director William Vrattos bought 500,000 shares at $7.31 on the same day and an additional 100,000 shares at $6.86 on September 17. Bardin Hill Investment Partners also acquired 357,021 shares on September 16, demonstrating concentrated insider buying. Their purchases likely represent more than opportunistic investing. CEO Schatzman projected at the March CERAWeek conference that "natural gas demand will grow 2% annually over the next 15 years" and "U.S. LNG production will meet export and power generation needs." Indeed, NextDecade approved the Train 4 FID on September 9 and plans to make a decision on Train 5 by year-end. LNG market conditions remain favorable. Saudi Aramco entered negotiations with Commonwealth LNG for a 2 million ton annual import contract on July 9, intensifying Middle Eastern oil majors' competition for U.S. LNG. The EU signed a $750 billion strategic energy purchase agreement with the U.S. in July, with substantial portions expected to be LNG. Notably, regulatory risks are diminishing. FERC staff recommended final environmental approval for the Rio Grande LNG project on July 31, marking progress one year after a court ordered supplemental environmental impact assessment in August 2024. From an investment perspective, key metrics warrant attention. NextDecade expects approximately $1 billion in annual cash flow once all five trains are operational. While Train 4 and 5 sales and purchase agreement rates were revised down to $2.54 per MMBtu, the 20-year contract stability remains attractive. Risk factors are evident. LNG projects require massive capital investment. Train 4 alone involves a $4.77 billion EPC contract with Bechtel. Rising construction costs and financing expenses could pressure profitability. Additionally, potential global LNG oversupply around 2030 makes price competitiveness crucial. However, current share prices appear to largely reflect these risks. While P/E ratios are difficult to calculate for development-stage companies, the market cap-to-sales ratio has reached quite attractive levels. Investment scenarios break down as follows: In an optimistic scenario, smooth Train 4 and 5 construction with additional long-term contracts could drive shares back to $15. The base case expects gradual recovery from current levels, while a negative scenario risks dropping below $5 amid construction delays or LNG price collapses. Concentrated executive buying signals their confidence beyond the base case scenario. The CEO's personal $2 million investment particularly demonstrates strong conviction in project success. NextDecade has the potential to become a core beneficiary of the massive U.S. LNG export expansion trend. The current price correction may excessively reflect short-term concerns, potentially offering attractive entry opportunities for long-term investors.