Please ensure Javascript is enabled for purposes of website accessibility

Why ReneSola's Shares Plunged 25.4% Today

By Travis Hoium - Updated Jan 25, 2021 at 4:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A big share sale isn't pleasing investors today.

What happened 

Shares of solar developer ReneSola (SOL 1.79%) fell as much as 25.4% in trading on Monday after announcing a large share offering. Shares are trading down 23% at 3:20 p.m. EDT. 

So what

ReneSola announced it was selling 10 million American depositary shares at $25 apiece in a deal that's expected to close on or about Jan. 27, 2021. Proceeds are expected to be around $250 million, which ironically is more than the company's entire market capitalization as recently as October 2020.

Solar farm in a grassy field.

Image source: Getty Images.

Management is clearly taking advantage of the high price of solar energy stocks right now to raise funds for the future. Just two weeks ago, management closed on a $40 million capital raise at $16 per share. 

Now what

What I would take from this is that even management thinks ReneSola's shares are so highly valued that it's too good to pass up. The company doesn't really need the cash with the recent capital raise already completed, but if the market is going to enable management to raise capital that could grow the business then it will take advantage of that. Just be aware that if management thinks shares are highly valued, there could be a correction ahead if ReneSola doesn't live up to increasing growth expectations. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ReneSola Ltd Stock Quote
ReneSola Ltd
$4.56 (1.79%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.