When the state is no longer subsidizing your solar energy be prepared to see various solar firms start crumbling one by one.
Described as the Wall Street nightmare stock, SunEdison Inc (NYSE:SUNE) has seen its shares collapse over the last 12 months by 97 percent. But at the start of Tuesday’s trading session, the solar firm’s shares plummeted 42 percent from around $1.30 to under 73 cents. This is an astounding plunge, especially considering that the company was trading at above $30 a share last summer.
There’s a plethora of reasons as to why SunEdison’s stock has entered penny-stock territory, including a widening debt load, various legal troubles, many financial woes and analysts and investors walking away from the firm. Also, one of the primary reasons why solar firms like SunEdison and SolarCity are facing significant troubles is the fact that states are changing their solar metering rates.
As part of changes at the state level, solar panel users would be paid for their energy at lower, wholesale rates rather than higher, retail rates. Opponents say that non-solar energy users have been paying hundreds of dollars extra each year in additional costs to subsidize the solar energy rates. This move has prompted much outcry from solar firms and solar energy users as well as celebrity activists, including Mark Ruffalo and Leonardo DiCaprio.
Whatever the case, SunEdison is on the verge of facing a billion-dollar default, which could help shutter its doors. It’s just a matter of time before it stocks plummets to 50 cents. There’s a reason why the stock is referred to as the Wall Street nightmare stock.
I have seen it so many times before. When you subsidize something it ends up costing more. When you deregulate something it ends up costing more. When is government going to get a clue and let the market decide if a product is worth buying. I guess that is why we are 19 Trillion in debt, failed government policy.