Why did the AGL share price have a volatile FY22?

We take a look at the major events that affected the AGL share price in FY22.

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Key points

  • AGL shares recorded wild swings throughout FY22 following an eventful year for the company 
  • For the FY22 period, the energy company's shares finished relatively unchanged when compared to the close of FY21 
  • AGL discarded its demerger plans after receiving strong opposition from major investors 

The AGL Energy Limited (ASX: AGL) share price went on a rollercoaster ride during the 2022 financial year.

The energy company’s shares finished at $8.20 on 30 June 2021 and closed at $8.25 at the same time this year. However, there were steep declines in between, trading as low as $5.10 during November 2021.

In contrast, the S&P/ASX 200 Index (ASX: XJO) crashed around 10% over the same period.

Share prices of AGL’s competitors, Meridian Energy Ltd (ASX: MEZ) and Infratil Ltd (ASX: IFT) backtracked 16% and 2%, respectively.

What happened to AGL shares throughout FY22?

Australia’s largest electricity provider had a busy year in FY22 with the proposed demerger that was eventually scrapped in May.

After reaching around the $8 mark in July 2021, AGL shares came under severe selling pressure in the following months. This came from difficult conditions of the national electricity market as well as unstable electricity prices.

Management noted the disappointing AGL share price performance as the demand for decarbonisation increased.

It’s worth noting that the company is one of the largest carbon emitters in Australia.

Furthermore, the Liddell coal-fired power station caused a financial strain on AGL’s books. It plans to transform the site with a hydro and solar energy facility after Liddell’s shutdown in 2023.

Fast forward to March 2022, AGL shares made a stunning turnaround after receiving an improved takeover offer from the Brookfield Consortium.

Although, this was soon rejected by the board as it believed the $8.25 per share offer undervalued the company.

Nonetheless, AGL shares continued to surge as investors closed their short positions following an uptick in energy prices.

More recently, the company ditched its demerger plans on the likelihood of being rejected for splitting into two separate businesses.

This led AGL shares to trade sideways before retracing due to fears regarding a potential recession in 2023.

AGL share price snapshot

A challenging year brought many twists and turns for the AGL share price.

While relatively unchanged since this time last year, in 2022, its shares have produced strong returns, up 35%.

At the time of writing, AGL shares are swapping hands at $8.26, down 1.08% for the day.

The company has a price-to-earnings (P/E) ratio of 6.78 and commands a market capitalisation of roughly $5.62 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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