NEXT

NextDecade($NEXT) CEO and Hanwha Aerospace Signal 'Bottom Buying' After 40% Plunge

11/25/2025 00:28

NextDecade ($NEXT) is a mid-cap energy company developing the Rio Grande LNG export terminal in Texas. This project, with an annual production capacity of 17.6 million tonnes, is recognized as key infrastructure for strengthening the U.S.'s global LNG export leadership. The company has secured long-term supply contracts with global energy companies including Saudi Aramco, Japan's JERA, and TotalEnergies, and approved its final investment decision for the Train 4 facility in September. Recent stock movements are sending important signals to investors. The stock, which traded around $10.70 in early September, plunged about 40% to $6.53 following Morgan Stanley's rating downgrade, reflecting concerns over higher-than-expected financing costs and profitability after the Train 4 FID. Morgan Stanley downgraded from Overweight to Equal-weight with a $10 price target, noting that expected annual cash flows from Trains 4 and 5 fell short of expectations. However, insider actions paint a completely different picture. CEO Matthew Schatzman purchased 280,000 shares worth approximately $2 million at $7.14 on September 12th. This represents a powerful signal of the chief executive directly countering market pessimism. More notably is the behavior of strategic investor Hanwha Aerospace. Hanwha has been continuously purchasing shares from late September through November, buying approximately $14 million worth of stock in the $5.87-6.09 range during November alone. Hanwha Aerospace, as a major shareholder of NextDecade, understands the long-term value of the LNG project better than anyone. Korea's leading energy infrastructure company increasing its stake during the stock's decline suggests current prices are excessively undervalued relative to intrinsic value. Particularly, their continued buying in the low-$6 range indicates this level may serve as strong support. Project developments show more hopeful elements than concerns. In March, the U.S. federal court modified FERC's authorization revocation, allowing construction to continue, and in July, FERC staff recommended final environmental approval. Currently, Trains 1 and 2 are 48.3% complete and Train 3 is 22.7% complete, with construction proceeding smoothly. Most importantly, the company secured $1.8 billion in equity commitments from TotalEnergies and Global Infrastructure Partners for Train 4. Global LNG market conditions also favor NextDecade. The EU signed a strategic $750 billion agreement for U.S. LNG purchases, and Japan's JERA decided to increase U.S. LNG share from 10% to 30% for supply diversification. This structural demand increase creates favorable conditions for NextDecade's long-term contract negotiations. At current price levels, the key indicator investors should watch is the Train 4 financing closure timing. The company stated that its fixed-price $4.77 billion contract with Bechtel is valid until mid-September, requiring final investment decision completion within this timeframe. If financing succeeds as scheduled, project risks would significantly decrease, likely triggering stock revaluation. Risk factors include high construction costs and financing risks. U.S. steel tariffs and skilled labor shortages have increased LNG project costs by 20% compared to 2021, pressuring profitability. Additionally, approval of competing projects like Venture Global's CP2 raises concerns about future LNG oversupply. However, NextDecade has already secured major offtake contracts with first LNG production scheduled for 2027, providing significant first-mover advantage over other projects. Continued buying by the CEO and strategic investors signals strong conviction that these fundamentals aren't properly reflected in current prices. Insider purchases in the $6-7 range indicate confidence in future upside potential, potentially offering attractive entry opportunities for long-term investors.