As of this morning, the Kincade fire covered ten thousand acres, was not contained and caused damage to two structures, Citi analyst Praful Mehta tells investors in a research note. It is not clear if PG&E equipment was involved, says Mehta, who believes shareholders are worried "and should be." It is important to note that any damages from a 2019 fire may be treated as post-petition claims that could recover 100 cents on the dollar, Mehta points out. Per AB1054, the wildfire fund is only liable to pay 40% of the damages for a 2019 fire. Further, the analyst believes that if Kindcade causes significant damage, PG&E's claim estimation and financing plans are likely to get delayed. Given the already very tight schedule to hit the June 2020 timeline per AB1054, a significant fire puts a timely exit and AB1054 at risk, says Mehta. As a result, the analyst believes the Kincade fire increases the probability of a zero share price for PG&E. While the bondholder plan wipes out existing shareholders, a large 2019 wildfire liability will also result in a similar outcome "purely from the liabilities and the associated need for additional financing," Mehta argues. He keeps a Sell rating on PG&E shares with a $5 price target. The probability of a zero equity value continues to increase, he says.The stock in premarket trading is down 28%, or $2.04, to $5.16.

Morgan Stanley analyst Stephen Byrd said PG&E filed an incident report on Thursday evening about the Kincade Fire which contained details that, while not necessarily indicating that the utility's equipment caused the fire, raise the risk that PG&E equipment could have been involved. He has an Equal Weight rating and $16 price target on PG&E shares, which are down about 20% to $5.72 at time of writing, off their worst levels from earlier in the pre-market session.