Please ensure Javascript is enabled for purposes of website accessibility

Why SunEdison Inc.'s Shares Dropped 14% Today

By Travis Hoium - Mar 3, 2016 at 12:04PM

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

More bad news today for this renewable energy developer.

Image source: SunEdison.

What: Shares of renewable energy developer SunEdison Inc. (SUNEQ) dropped as much as 14% in early trading Thursday after announcing the suspension of its preferred stock dividend.

So what: SunEdison announced after the market closed yesterday that it was suspending its dividend on 6.75% Series A Perpetual Convertible Preferred Stock. The dividend owed to these shareholders will continue to accumulate, but the company doesn't have the money to pay it now. This amplifies investors' fears that SunEdison will soon run out of cash, especially if it acquires Vivint Solar (VSLR)

Speaking of Vivint Solar, The Wall Street Journal is reporting today that banks that have agreed to provide capital for the acquisition are starting to back out. Borrowing costs have been rising for SunEdison, and if banks don't agree to fund the Vivint Solar acquisition, it would show just how far confidence in the company has fallen.

Now what: Almost everyday, SunEdison stock is moving over 10% higher or lower, depending on the news of the day. But the overarching theme is that SunEdison's cash position is becoming more tenuous and banks are starting to either demand higher rates or backing out from lending to the company at all. The future continues to dim for the company, and if it can't even get banks to lend it money, I don't know how it's going to survive.

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

SunEdison, Inc. Stock Quote
SunEdison, Inc.
Vivint Solar, Inc. Stock Quote
Vivint Solar, Inc.

*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 05/28/2022.

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.