Shares of solar developer ReneSola (SOL) 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.
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.
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.
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.