Vistra says Texas election outcome does not doom data center growth

what happened

According to the Wall Street Journal, shares of Vistra, the largest electricity generator in Texas, dropped 19% from Tuesday through Thursday, the steepest fall among its power plant peers. On Friday the stock rebounded 10%, recovering only part of the loss.

The selloff followed the state elections. Democrat Gina Hinojosa won the governorship, and Democrats took a majority in the Texas House, while Republicans kept control of the Senate. Texas remains a major hub for data center construction.

On Friday's earnings call, Vistra chief executive Jim Burke called a prolonged moratorium on data centers in Texas a "bridge too far" at this stage. He said neither the governor-elect nor the legislature had signaled they wanted to turn away that load. He expects tighter standards on which data centers can connect to the grid instead.

why it matters

Jefferies reports that wholesale forward power prices in Texas have fallen more than 20% this year, partly because of the data center permitting pause introduced by Republican Governor Greg Abbott. Vistra's forward earnings multiple of 12.6 is still about 44% below its level a year ago. The valuation may stay under pressure until the newly elected officials set out a clear long-term data center policy.

market impact

Vistra and Texas power: uncertainty over data centers weighs on the stock and forward power prices

• ↔Vistra shares mixed — valuation depends on the state's future data center policy
• ▼Texas forward power prices pressure down — the data center permitting pause lowers expected demand

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instruments