What happened 

Shares of Chinese solar manufacturing giant JinkoSolar Holding Co., Ltd. (NYSE:JKS) plunged as much as 10.8% in trading Wednesday after the company announced a large sale of stock. The company tried to give investors confidence management was all-in, adding a $35 million purchase of shares by the CEO and chairman of the board, but shares were still off 8.6% as of 11:55 a.m. EST. 

So what

JinkoSolar offered 3.6 million American depositary shares (ADSs) to public markets and sold another $35 million of ordinary shares to chairman Xiande Li and CEO Kangping Chen in a separate offering. Bankers have the option to purchase another 540,000 ADSs to cover over-allotments. 

Large solar farm in a grassy field.

Image source: Getty Images.

The price of the ADS offering was $18.15, which means the total offering will raise about $100.3 million, minus fees before the over-allotment. According to management, the money will be used to build a U.S. manufacturing facility and for working capital. 

Now what

The dilution will increase shares outstanding by about 17%, which is what investors are concerned about today. If JinkoSolar doesn't have the cash flow to build a plant in the U.S., it may not be a wise decision to offer shares to build one given the short-term nature of the potential benefit of manufacturing here. I think this shows that JinkoSolar wants to be the biggest, but maybe not the most profitable, solar manufacturer in the world, which is a big reason to stay away from the stock. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.