SunEdison Inc has seen its shares climb 46 percent in the last five trading sessions. The solar energy firm has received some good news in the past week, which has revived interest in the firm. But the key question was: can it last? Apparently not for long as shares closed down nearly 13% today. The stock price is down an additional 13% in after hours trading.
The likely culprit is the fact that SunEdison will delay the filing of its 2015 10-K (annual report). The company reports “the need to complete all steps and tasks necessary to finalize the Company’s annual financial statements” and other disclosures, and “ongoing inquiries and investigations by the Audit Committee.”
SunEdison’s Sunny Days Making a Comeback?
Last week, a Delaware judge had declared that David Tepper, a billionaire hedge fund manager of Appaloosa Management, isn’t allowed to block the solar firm’s $1.9 billion acquisition of Vivint Solar Inc , a solar installer. Tepper, the judge confirmed, couldn’t prove the terms of the Vivint Solar-SunEdison deal would hurt its shareholders.
Following the news, Vivint Solar shareholders approved the deal with SunEdison. It’s expected that arrangement will be completed sometime in the first quarter of this year.
Upon the news, this helped the firm’s stock jump 35 percent during pre-market trading, and another 37 percent increase Thursday. This was the biggest one-day increase for SunEdison in more than a decade.
On Friday, Deutsche Bank released a research report that gave SunEdison a “Buy” rating. It also provided the clean energy firm with a $6.50 target price. An array of firms have poured money into SunEdison, including Investment House LLC, Essex Investment Management Co. LLC and Breton Hill Capital Ltd.
During the last two years,SunEdison Inc has been on a shopping spree. Early last year, for instance, the firm bought the assets of Solar Grid Storage, an energy storage startup. In 2014, SunEdison and its yieldco, TerraForm Power Inc , purchased energy firm First Wind.
Does this mean SunEdison’s sunny days are on the verge of returning? Not so fast.
Brazilian Firms’ Lawsuit Against SunEdison
As SunEdison finishes one lawsuit, it has to prepare itself for another one.
It was reported by the Valor Economico newspaper Thursday, Grupo BTG Pactual SA and Patria Investmentos Ltda will take SunEdison to court. The lawsuit stems from a power company sale that didn’t happen.
The two companies are looking for $150 million in compensation for investments that they made in order to get Latin American Power prepared. The deal was valued at $733 million in 2015. SunEdison had to back out of the deal because it lost most of its value due to financial losses and a failed multi-billion-dollar acquisition.
In addition to this, the firm is getting ready to get rid of equity in a 500 megawatt project it had been awarded in India. SunEdison is seeking potential buyers and has worked with investment bankers to value the project.
The news seeped into the market and helped send the stock downwards. During Monday’s trading session, shares were down in double digits to about the $2 range.
Some investors may feel SunEdison has hit rock bottom, which is why so many investment houses and financial entities have doled out a lot of cash to buy its stock. Just take a look at these numbers: in 2007, SunEdison shares were nearing $100, but then they plunged to around the $20 mark a few months later. Year-to-date, the stock has fallen 60 percent from just under $6 to around $2.
Is SunEdison a buy for the long run? Officials are hoping so since it launched its new “re-engineering” business model by cutting jobs and closing down factories. Its business has also honed in on green-rich California, where it has closed several deals in the last three months alone