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Actionable news in SUNE: SUNEDISON Inc,

SunEdison May Be More Dead Than Alive


The company is extremely leveraged.

Tangible book value is under water.

Cash flow is negative.

There is no sales growth.

SunEdison (NYSE:SUNE) is the stock of the season. Many people rave about the stock and big name investors like David Tepper, the founder and portfolio manager of Appaloosa Management, have taken a substantial position in the company. In short, SunEdison is what is known as the darling of Wall Street. Now, with the share currently trading at pennies, many investors believe this is a once in a lifetime opportunity where you will bet X amount of money in the stock and you will make as they say, a killing! Yes, day dreaming about this waters everyone's mouth and places you in a state of mind that heaven does not even get close to.

What is SunEdison? SunEdison is the largest global renewable energy company. It develops, finances, installs, and operates renewable power plants. In the stage of time the world is currently in, renewable energy is of extreme importance and its future dominance and growth seem obvious. However, in theory, this is true but putting it in practice by generating electricity in a continuous increasing manner does not seem so. In finance, it's almost impossible to grow at a faster rate than your return on capital unless you seek additional capital. If you seek that additional capital by raising equity, business activity will increase at the amount of capital raised normally. If on the other side, you raise capital by issuing debt in an uncontrolled fashion, the exponential amount of risk incurred can (and most probably) become worrisome.

So why has SunEdison's stock price taken such a beating to the point it is worth pennies? In summary, SunEdison has in recent years bought billions in assets with debt. As of December 31, 2014, SunEdison had $11.5 billion in assets and $10 billion in total liabilities. As of September 30, 2015, SunEdison had $20.7 billion in assets and $16.1 billion in liabilities. The increase in total debt rose $4.7 billion to $11.7 billion from $7...