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Why ReneSola's Shares Popped 16.4% Today

By Travis Hoium - Jan 12, 2021 at 2:47PM

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A big infusion of cash could drive growth at ReneSola.

What happened

Shares of solar developer ReneSola ( SOL 4.47% ) jumped as much as 16.4% in trading Tuesday after closing on $40 million in new financing. The gains held throughout the day, and at 2:10 p.m. EST, shares were still up 13% on the day.

So what

ReneSola closed a previously announced $40.0 million registered direct offering: 2.5 million American Depositary Shares, or ADSs, were sold for $16 per share. Notably, that's well below where shares are trading today.

Solar farm with wind turbines in the background.

Image source: Getty Images.

As much as it might seem that ReneSola didn't get a high enough price for the stock, remember that shares were trading for less than $8 per share as recently as Dec. 18. So this is well above where this solar energy stock has traded over the last year.

Now what

Investors are betting that management can turn the additional funds from the offering into a growing portfolio of solar energy assets. ReneSola's management said the funds would be used to grow the project pipeline and for working capital, so the plan is to grow the business. What investors will want to watch is whether signed projects increase over the next few quarters with this expanded balance sheet. We won't know for a year or two just how profitable projects are going to be, but getting them into the pipeline is the first step for a company like ReneSola right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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ReneSola Ltd Stock Quote
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