Norfolk Southern (ticker: NSC), shares have lost approximately 11% of their value since the February 3rd hazardous chemical train crash in East Palestine, Ohio. We recently wrote about the incident in detail in our article Show Norfolk Southern CEO Alan Shaw The Door. It would seem that NSC shares have significant downside risk from here as lawsuits roll in and the cleanup begins.
NSC shares have significant downside risk:
Scores of lawsuits will be filed. Certainly civil lawsuits. Is it possible that criminal lawsuits may be filed? Sure. Anything is possible, especially when politicians are involved.
Public outcry is going to continue to grow. A content trove is cycling through social media and will further incite the public.
Someone’s head has to roll. That someone will be Norfolk Southern CEO Alan Shaw in my view. Removing Shaw – a Marketing Executive by experience – will be a positive from a PR standpoint. I would argue that removing Shaw will be beneficial to operations as well – large NSC holders ought to be calling for Shaw’s head (sadly, most will do nothing).
Shaw does not appear to be someone who has engendered loyalty among the rank and file during his brief CEO tenure. Shaw is tone deaf. A $1 million fund to support East Palestine’s victims is laughable. As we wrote in our recent article, Norfolk Southern spent $6.5 billion on share repurchases over 2021 and 2022 (only $1.3 billion on railway materials over the same period). Therefore the $1 million East Palestine community fund is anemic by comparison. This is a life or death moment for Norfolk Southern. However, they don’t yet seem to realize it. The frog slowly boils.
What’s my tab? The final bill to Norfolk Southern related to the East Palestine cleanup will undoubtedly be enormous. The final tally is years away.
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