PCG, EIX Stocks Crash As Wall Street Warns Of Liability Exposure On California’s Latest Wildfire Legislation – Retail Calls Selloff An ‘Overreaction’

• BMO downgraded PG&E to ‘Market Perform’ from ‘Outperform’ and cut its price target to $21 from $28, according to The Fly.
• Mizuho downgraded Edison International to ‘Neutral’ from ‘Outperform’ and cut its target to $70 from $86.
• PG&E said the legislation does not adequately address financing risks.

Shares of PG&E (PCG) and Edison International (EIX) crashed more than 20% each on Monday after California’s latest wildfire legislation failed to provide the financial protections Wall Street had expected.

The selloff followed several downgrades, with analysts warning that utilities and their shareholders remain exposed to potentially severe wildfire liabilities.

PCG shares hit a new 52-week low while EIX stock saw its biggest single-day slump in over 25 years.

What Is SB 492?

SB 492, or Senate Bill 492, is a wildfire bill intended to improve prevention, preparedness and compensation for victims. It is expected to create a faster claims-payment program, strengthen wildfire data sharing and allow additional bonds to support the state’s wildfire fund.

However, Wall Street believes that the wildfire-response bill, introduced over the weekend, leaves publicly traded utilities responsible for related liabilities.

Wall Street Turns Skeptical

BMO downgraded PG&E to ‘Market Perform’ from ‘Outperform’ and cut its price target to $21 from $28, according to The Fly. Despite the significant cut, it still represents a 56% upside from current levels.

The firm warned that the bill leaves investors exposed to “open-ended wildfire-related tail risk.” BMO also added that it does not see any changes being made to rectify the “critical deficiency” in the bill.

Mizuho lowered PG&E’s rating to ‘Neutral’ from ‘Outperform’ and reduced the target to $16 from $21. It also downgraded Edison International to ‘Neutral’ from ‘Outperform’ and cut its target to $70 from $86.

The firm noted that California Governor Gavin Newsom proposed certain solutions to limit withdrawals from the wildfire fund, including a $6 billion cap per incident, but the proposals failed to make the final cut.  

Meanwhile, Wells Fargo downgraded PG&E to ‘Equal Weight’ from ‘Overweight’ and trimmed the target price to $24 from $25.

While PG&E acknowledged that the bill would improve wildfire preparedness and help victims recover, it said the legislation does not adequately address financing risks or create the durable framework needed to attract affordable investment or control customer costs.

Retail Calls Selloff An Overreaction

Despite the crash, retail sentiment surrounding PCG on Stocktwits remained ‘extremely bullish’ over the past 24 hours, while sentiment for EIX flipped to ‘bullish’ from ‘neutral.’

One user called PCG’s and EIX’s slump an ‘overreaction.’

Another user said that despite the crash, there are “no changes in the fundamentals at all” for PCG.

PCG shares are down around 18% while EIX stock has declined 11% so far in 2026.

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