Solar Power Inc (OTCMKTS:SOPW) Flies to a New 52-Week High
On August 16, Solar Power Inc (OTCMKTS:SOPW) issued a press release in which they discussed the company’s financial results for the second quarter of 2013. Basically, they said that things are not going quite according to plan. The solar energy industry on the whole is, apparently, going through a tough period and this is affecting all the players in the business, both big and small.
The 10-Q itself, which appeared a few hours later showed that SOPW have definitely been hit hard. The positive working capital has turned into a deficit, the revenues have been massively decreased year-over-year and although they have managed to reduce some of the costs, the net loss has increased more than threefold due to some bad debt expense. They also said that their parent company, LDK Solar Co., Ltd (NYSE:LDK), are having some troubles of their own and they informed the shareholders that they are discontinuing the quarterly earnings conference calls for the time being.
We’re not sure if limiting the communication with the stockholders is such a wise move during a hard period like this and back then, we thought that the depressing-looking financial statement is bound to push the ticker towards the bottom of the chart. Yet, it didn’t. In fact, the days following the issuance of the report were quite uneventful – trading volumes were dismal and the price barely moved.
While the traders didn’t seem all that bothered about the bad news, SOPW knew that they have to do something and get the company back on its feet. On August 20, another press release hit the wire, informing us that they are taking some steps in order to set things straight. They plan to align their operations more closely with LDK, which in turn would mean that they will focus a larger part of their resources on the Chinese market. This might turn out to be a good call since a little over a month after that decision was made, the Chinese Government decided to encourage solar energy manufacturers by offering a 50% refund on value-added taxes. SOPW also announced some changes to the management team which took effect a couple of weeks later.
This time, although not immediate, the investors’ reaction was quite different. On August 22, SOPW‘s value surged by as much as 105% closing the day at $0.115 per share. We’ve seen a few corrections since then, but after yesterday’s 10% run, the ticker stands at $0.295. This makes for 156% gains in less than two months but the million-dollar question is: “Where to next?”.
Unfortunately, at this point, predicting the ticker’s movement is extremely difficult. Back in August, when the less than perfect 10-Q came out, we were expecting the price to take a plunge but it didn’t. Then, at the beginning of October, it made a sudden surge in the right direction fueled by record-breaking volume which was then corrected. The behavior at the moment is erratic at best and looking at LDK‘s chart, we can see that they too are struggling to show any consistency.
One thing is for sure: the next quarterly report should give us a better idea of where SOPW stand. They believe that the initiatives undertook on August 20 should give them a chance to improve both their financial statement and their share price, but, as always, guarantees are nowhere to be found. In the meantime, the risks associated with a potential SOPW investment are definitely worth considering.
On the bright side, the paid pumpers have not shown any interest in the ticker for over two years. At the moment they seem more prone to targeting ventures like Nutranomics, Inc. f/k/a Buka Ventures, Inc. (OTCBB:NNRX) and Alkaline Water Company Inc (OTCBB:WTER) – companies with quite a lot more question marks and red flags around their business models.
