Will Solar Power, Inc. (OTCMKTS:SOPW) Maintains Its Share Price?

For the last four months the stock of Solar Power, Inc. (OTCMKTS:SOPW) has been on fire. At the start of July it was hovering around 25 cents per share while on October 24 it posted its current 52-week high of $2.95. Although it suffered a couple of sizable corrections the company managed to recover some of its losses and as of Friday it is trading at $2.25.

SOPW’s activity on the business front mirrors the incredible ascent of its stock. They have been issuing a constant torrent of PR articles announcing new projects, acquisitions and agreements. On October 29 they announced the latest acquisition – Shanghai All-Zip Roofing System Group Co., Ltd. In order to pay the necessary sum of around $54 million Solar Power will use its common shares valued at $2.38 each and this leads us to the major red flag around the company.

If you have been following our articles you would by now know that SOPW have been putting their shareholders through a considerable amount of dilution. We warned you that earlier this year they issued 136 million shares at just $0.16 followed by another 92 million priced at $0.27. So far the company has also closed two previously announced private placements – on October 21 they completed a $43.8 million placement while just three days ago they announced the completion of a $48.25 million one. Although the shares sold under these placements were valued at $1.17 and $1.38, respectively, they are still nowhere near the current market price.

Investors should also consider the fact that as of August 19 42% of SOPW was owned by LDK Solar Co., Ltd., a company that last month filed for bankruptcy.

Currently Solar Power commands a market of more than $750 million, which may be a bit too much considering their financial results at the end of June. The quarterly report covering the period contained:

• $5.85 million cash
• $17.24 million current assets
• $44.09 million current liabilities
• $9.94 million revenues
• $2.17 million net loss

The next financial report should be submitted by the end of the week and it will show what the current share structure is.
Having appreciated so much in so little time SOPW may look as an enticing opportunity but if you don’t already have a position chasing after it may not be the best decision. Do extensive due diligence and take into account all the risks before putting your money on the line.