Why is the Liquefied Natural Gas Ltd share price plunging?

Liquefied Natural Gas Ltd (ASX:LNG) is being hammered by investors.

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Credit: Alex Proimos

The Liquefied Natural Gas Ltd (ASX: LNG) share price continued to plummet in early trading today – falling a further 11%.

It’s been an incredibly tough ride for LNG Ltd shareholders in 2015, on the back of a 1,400% share price rise in 2014. Now, with shares down a massive 66% from this time last year, the market appears to have lost all faith in the business’ growth potential.

Source: Google Finance
Source: Google Finance

While LNG Ltd’s share price sits a lofty 289% higher than it did at the start of 2014, on its current trajectory those gains may not last long.

Is it a buy?

LNG Ltd’s share price fell today despite no company-specific news being announced. However, it follows some important announcements last week, including its AGM presentation and the resignation of Mr Paul Bridgwood. Mr Bridgwood is the originator of LNG Ltd’s patented OSMR technology. The OSMR technology allows Liquefied Natural Gas (LNG) tolling and liquefaction facilities to be constructed and run far more efficiently than they would be ordinarily.

At 30 June 2015, Mr Bridgwood held roughly 4.5 million LNG shares, given he sold roughly 3.6 million in 12 months prior. The company’s AGM presentation appeared upbeat since the company received some positive regulatory news earlier in the week.

Unfortunately, against a backdrop of plunging oil prices, which may indirectly threaten the viability of LNG Ltd’s two prospective tolling facilities in North America, investors have clearly grown bearish of the company’s outlook.

Personally, I can see why investors’ sentiment may be souring. After its tremendous rise in 2014, I took almost all of my LNG Ltd shareholding off the table. And without any material revenue being recorded by the company, an investment in LNG Ltd – even at today’s prices — is not one for the fainthearted.

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Motley Fool contributor Owen Raskiewicz owns shares of Liquefied Natural Gas Limited. Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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