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Why ReneSola's Shares Plunged 25.4% Today

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

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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. 

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

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