SunEdison's Shares Are Worthless

SunEdison’s (SUNE) bankruptcy is inevitable. If you are still long and are hoping for a turnaround, I would advise you to learn from your mistakes and cut your losses because there’s no way that the company will survive for long.

The company’s condition is becoming worse day by day. It is all now but inveterate that SunEdison, which labelled itself the largest renewable energy across the globe, is on its way to bankruptcy. Recently, TerraForm Global stated that there is considerable risk that the company will shortly strive for bankruptcy protection.

If the company goes bankrupt, there will be a flow of consequences for the solar energy sector.
The main reason behind SunEdison’s bankruptcy will not be its technology, but the debt. Along with huge debt, SunEdison’s poor strategy to bid too violently for new energy power buying agreements also account for the reason to push SunEdison downward.

SunEdison has many major rivals like First Solar and SunPower that performed very well in the previous year and have made lucrative business by building and selling large projects. However, they did not over-clout their business, and so are in the safe zone. Unlike SunEdison, they have a distinguished technology.

Instead of focusing on building projects and selling them, the company focused on acquiring new energy power agreements. Incompetent management of SunEdison was unable to deliver on its goals, and depending deeply on financial engineering is not a way to survive in the long-run.

In the renewable energy sector, there are two significant modules for developers. First, they need business, utility, or property holder to purchase energy from them via power purchase contract. Second is the financing section.

SunEdison failed on almost every count, which will probably make utilities put an abundant prominence on searching reliable developers in the future. As compared to SunEdison, SunPower and First Solar are better investment option. Stockholders may gaze at them more suspiciously in the near-term, but in the long-run, their business will probably see greater margins and surging demand mainly because they are consistent. First Solar is already profitable and has been for a long time.

On the contrary, SunEdison is bleeding money, and will soon be bankrupt. Incompetent management has driven a potentially good business into the ground and it is only a matter of time before the company goes bankrupt. Although it is a bit too late, investors should cut their losses and dump the stock.
Published on Apr 11, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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