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Solar Pioneer SunEdison Heading Rapidly In The Wrong Direction

By Motley Fool Staff - Apr 9, 2016 at 7:00AM

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The company's share price has plummeted and it got a visit from the U.S. Department of Justice which doesn't bode well for its future.

Not a lot has been going right for SunEdison's (SUNEQ).

The company just saw its share price nosedive by 60% and it has been issued a subpoena from the U.S. Department of Justice. Either one of those things would be bad news, but both happening in rapid succession puts the future of the company in doubt.

In this clip from The Motley Fool Money radio show, Chris Hill, James Early, and Ron Gross go over a few of the many dings against the company, and why -- even at such a low price -- the stock is not a good buy.

A transcript follows the video.

This podcast was recorded on April 1, 2016.

Chris Hill: SunEdison bills itself as the largest global renewable energy development company, and it is getting smaller by the day. Shares down more than 60% this week. James, there's a lot going on, and on top of all of that. the U.S. Justice Department came knocking on their door with a subpoena.

James Early: You know, Chris, I had $0.50 in my pocket today, and I debated between buying some chips from the vending machine or a share of SunEdison.

Ron Gross: (groans)

Early: This is just a classic example of a company that stuffed way too much in its mouth and then couldn't digest it, and spit it out and whatever else. I mean, these guys hide debt, they're getting sued after a failed acquisition, DOJ investigations, CFO resigned... everything is bad about this company. It's just an obvious example of how you don't have an unlimited runway in renewable energy, no matter how feel-good of a thing you're doing. You have to control yourself, and they didn't.

Hill: So, the fact that the stock has dropped from the mid-30's to $0.50 in six months, you don't look at that and think, "Ooh! Maybe I'll take a flier!"

Early: Ron, I have to ask -- it does seem like a Ron kind of a stock.

Gross: I would like to do a liquidation analysis or a balance sheet analysis, or just take a quick look at tangible book value, and where are we in relation to the stock price?

Early: Ron, you know much more about this than I do -- they're already entering debtor-in-possession financing.

Gross: Oh.

Early: Isn't that--

Gross: Well, that's different.

Early: If you're an equity holder, you're probably going to get wiped out, right?

Gross: I didn't realize we were at that point. (laughs) 

Early: You know, Einhorn owns 7% himself, and Greenlight owns 4%. 

Hill: How's that working out?

Early: Apparently not very well.

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