Sunedison Inc. (fka SUNEQ)

[whatisthecolorofmone]

What Went Wrong?

So how did SUNE stock go from being the best thing since sliced bread at the beginning of 2015 to effectively being radioactive since the second half of 2015?

The steep plunge in the price of oil and natural gas is often the knee-jerk explanation; it's presently cheaper for utility companies to power their plants with natural gas than solar power. And to be fair, that is a contributing factor.

It's not the big one, though.

The bigger impasse was and still is a mountain of debt SunEdison can't service given its revenue model and current market

The debt-driven/income-pass-through model isn't flawed. Real estate investment trusts and master limited partnerships use it effectively. But SunEdison and its partner/customer TerraForm Power (
TERP
) are struggling to make the model work simply because the duo spent too much money for too little cash flow . TerraForm should have been seeking projects that yielded something between 8% and 10%, but in an effort to be first and biggest, it bit off projects with much lower likely returns.

Oh, the up-front payback looks good, as it did headed into 2015 when the market was going hog-wild for yieldcos. The longer investors had to study the math, however, the clearer it became the math didn't and still doesn't make long-term sense the way SunEdison and TerraForm were trying to make it happen.

http://www.nasdaq.com/article/sunedison-inc-this-bust-can-teach-us-all-a-lesson-cm597161