Sunedison (SUNE) Stock: Was SUNE Really In The Wrong?

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Sunedison Inc (NYSE: SUNE)

Sunedison has had an incredible time in the market recently as a result of several pieces of positive news that have been released. However, today, the stock is heading on declines and for good reason. A class action lawsuit was opened against the company, leading to investor concern. Today, we’ll talk about the class action suit and whether or not this is likely to be the end of gains for the stock.

SUNE Sued For Misleading Investors

Recently, the law firm Robbins Arroyo LLP filed a class action suit against SUNE, stating that the company deliberately misled investors. According to the suit, in 2014 and 2015, Sunedison issued several quarterly statements showing increases in net sales and explaining that the company was poised for growth. However, in the mean time, SUNE was taking on massive amounts of debt… $11 billion in debt to be exact. This debt was taken out in order to fulfill acquisition plans the company had, plans that the lawsuit claims were an acquisition binge. As a result of the so-called binge, in the second quarter of 2015, SUNE reported a loss of $263 million on $455 million in revenue. In October, the company laid off 15% of its workforce and announced several restructuring changes. So, Robbins Arroyo LLP believes that based on the financial data we’ve seen from the company as of late, SUNE deliberately misled investors, and the firm is working to make things right.

Was There Any Wrong Doing On SunEdison’s Part?

In my opinion, the answer to the above question is no! The reality is that sales were going great, and many companies take out debt in order to fulfill acquisition plans. In fact, that’s something we’ve seen numerous times this year and last! I believe that SunEdison honestly believed that the acquisitions would greatly increase the value of their company and prove to be strong moves for their shareholders.  In the long run, that will likely be the case. Therefore, while this is going to cost SUNE money with regard to legal fees, I think that the complaint is more or less baseless and likely to be shot down in court.

What We Can Expect From SUNE Moving Forward

Moving forward, I still have a bullish opinion of what we can expect to see from SunEdison. However, it’s important to note that news moves the market. With that said, in the short term, particularly over the next couple of trading sessions, we can expect to see losses as investors wrap their minds around the lawsuit filed against SUNE. Nonetheless, in the long run, things are looking up. Here’s why…

The views of consumers, businesses, and governments alike on energy are changing! Over the years, we’ve all heard about how fossil fuels impact the global climate, and that has become a major concern for many. However, the stories are moving toward action now. Recently, Paris announced a landmark deal in which 195 countries have agreed to start working on greenhouse gas emissions. This will reduce reliance on fossil fuels and increase sales for renewable energy companies around the world. In other news, we also recently heard that the 30% federal tax credit for consumers and businesses that install renewable energy systems in their homes and offices will be extended past 2016. This gives potential customers more incentive to act on their renewable energy goals, which will also likely lead to a higher sales volume for SUNE. Also, with the acquisitions in mind, I believe that the company is taking the right position. Essentially, SUNE is positioning itself to take a large percentage of the market share in the renewable energy space. While this may have put the company in debt for now, in the long term, it’s likely to bring profits!

What Do You Think?

Where do you think SUNE is headed and why? Let us know your opinion in the comments below!

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.

1 COMMENT

  1. Goods time to pick up more.
    The yields from Solar PV areincreasing year on year.
    SunE & Vivint are ready to capitlalise when this market explodes in the coming years.

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