Shares of Constellation Energy Group traded more than 9% lower on Friday to test the stock’s critical 50-day moving average.
Investors were triggered to sell as a report that the U.S. Government was holding talks to determine whether it would scrap the process of holding multibillion-dollar power auctions with some of the largest energy providers n the country.
The talks are meant to assess the country’s demand for power and its aging power grid system. Both look to be stretched as demand for more data centers increases while AI service companies continue to expand.
Constellation Energy along with Duke (DUK), Con-Edison and other utility companies would be most affected by any changes to the process for supplying power to the current energy grid.
Shares of Constellation Energy have traded with increased volatility over the last month.
Shares dropped sharply in the wake of the DeepSeek announcement in January. The implications being that Constellation and other providers of power for AI data centers may see less demand in the future.
More recently, the company saw its stock roll over after its earnings results on February 18.
Earnings per share beat analyst expectations while the company missed its revenue target by a wide margin.
CEG shares find themselves at two critical price features after today’s selling.
First, the stock is sitting directly on its 50-day moving average. This much watched trendline sits at the $278 price and has acted as support so far.
The $278 price also represents the January lows immediately following news of DeepSeek.
The combination of events makes the $278 price kep for Constellation Energy to maintain its intermediate-term trend. Investors should expect that a drop below that price will route more sellers out of the stock, pressuring shares to a target of $250.
From a long-term perspective, Constellation Energy shares maintains its bullish outlook with a price target of $350.
