What happened
Shares of solar energy stock ReneSola (SOL -2.30%) fell as much as 17.1% in trading on Wednesday after the company reported earnings and responded to a short-seller report. But shares bounced back as the day went on, and as of 3:10 p.m. ET, they were trading flat for the day.
So what
The third quarter didn't end quite the way management had expected, with revenue falling 16% sequentially to $15.5 million and non-GAAP (adjusted) net income plunging 77% to $1.7 million. However, revenue can be volatile based on the timing of project sales, so a single quarter's results should be taken with a grain of salt.
Image source: Getty Images.
More encouraging is that the pipeline of mid- to late-stage projects is now 1.84 gigawatts (GW), nearly hitting management's goal of 2 GW for the year. Potential projects are primarily located in the U.S. and Europe with expected competitions in 2022 and beyond.
Management also pushed back on a short-seller report that came out last week. The short-seller accused management of inflating its backlog and facing potential legal trouble. Keep in mind that short-sellers are betting against a company and have an interest in seeing shares fall, but their claims are worth taking into account if found to be valid.
Now what
Shares recovered sharply today, but it's hard to ignore the falling revenue and low profitability of ReneSola. The company could have a bright future if its pipeline comes to fruition, but the solar project development business is competitive and there's no guarantee of success. I'll stay on the sidelines today and see how future quarters play out.
