SUNE Stock: Could SunEdison Inc Surge After No Evidence of Fraud?

SUNE StockA Turning Point for SUNE Stock?

SunEdison Inc (NASDAQ:SUNE) has been on a rollercoaster ride for the last year. The company endured a ton of bad press, legal troubles, and concerns about its debt. All those factors have dragged SUNE stock down to penny stock levels.

This was a dramatic fall for Wall Street’s sweetheart stock, which billed itself as “the biggest renewable energy company in the world.” But then something happened to cause a 58% surge in SunEdison stock.

Before we get to that, though, here’s a little background on the company’s laundry list of troubles. (Source: “Inside the Fall of SunEdison, Once a Darling of the Clean-Energy World,” The Wall Street Journal, April 14, 2016.)

There were three major drags on the stock price:

The first was SunEdison’s massive debt load of $11.0 billion. As oil prices dropped, investors grew more and more concerned about the company’s ability to service the debt.

Considering that investors were growing skittish of SunEdison’s long-term debt, it seemed a terrible time for the firm’s planned acquisition of Vivint Solar Inc. That deal ultimately ended in failure, but not before it dragged SUNE stock through the mud—that was number two.

The third major drag was a lawsuit. A billionaire investor in one of SunEdison’s subsidiaries sued SunEdison over the Vivint acquisition, putting SUNE stock’s share price into a tailspin. So in a way, all three reasons were part of one long thread.

Those reasons were responsible for a larger part of SUNE stock’s decline, but then something else happened: the company was accused of having fraudulent activities on its books, which, as you can guess, caused a massive drop in its stock price.

However, SunEdison just finished an internal investigation and no evidence of wrongdoing was found. When the report came out, SUNE stock spiked by more than 58%. (Source: “SunEdison Internal Investigation Finds No Material Misstatements or Fraud,” The Wall Street Journal, April 14, 2016.)

If the external reports corroborate the internal investigation, the share price could continue to skyrocket. That being said, the company also started to renegotiate the terms of its debt, paring back its gains by 21%. (Source: “SunEdison Enters Bankruptcy Loan Negotiations With Its Lenders,” Bloomberg, April 15, 2016.)