SunEdison, the world’s largest renewable energies firm, saw its stock plummet 40 percent on Tuesday over concerns that the firm may go bankrupt.
Although the company’s share price hit a high of $30 in July, the stock has fluctuated since, settling on a price of $0.59 at noon on Tuesday. SunEdison, which has accumulated $11 billion in debt acquiring renewable energies projects, is recovering from from the massive drop their stock price took on Tuesday.
— Bloomberg Markets (@markets) March 29, 2016
SunEdison’s business structure involves the development of newly acquired projects until they mature enough for ownership transfer to one of two separate, publicly owned companies, called yieldcos, which SunEdison also controls. The company uses two internal financing entities that have raised $2.5 billion dollars to finance project acquisitions, which are developed until they are profitable enough for transfer to the yieldcos.
An industry insider claimed that SunEdison’s structure “is way too complicated.” Suggesting that the structure could potentially hurt the company, he claimed that “it’s a great company with great assets. It’s the finance department that’s the problem…They over-engineered it to death.”
SunEdison “just thought they were smarter than everyone else,” said David Levine, the founder and CEO of Geostellar, a solar energy-focused firm that has done business with the company. S&P analyst Angelo Zino suggested that the company’s “hyper-growth strategy…from late-2014 to the middle of 2015” is part of what led to the company’s downturn. Other analysts have suggested that it was the acquisition of residential solar company Vivint for $2.2 billion in 2015, that began the downward trend.
Although SunEdison has pointed to the strong growth in the renewable energy sector last year, they’ve claimed they may file for bankruptcy protection.