Real Goods Solar Gets Chilly Reception
And it isn't getting off to a great start this year, profit-wise. In its most recent prospectus, Real Goods Solar said, "During the quarter ended March 31, 2008, we preliminarily estimate our net revenue to be approximately $6.5 million and our net loss to be between $300,000 and $350,000."
Investors might also recall Real Goods from its last appearance in the public markets -- especially those familiar with the Nasdaq bulletin board stocks in the late 1990s. That's was the stomping grounds for Real Goods Trading Co., where it went from a high of $6 in early 1999 to $3.25 in late 2000.
In October 2000, Gaiam (GAIA) agreed to buy Real Goods Trading Co. for $8.7 million. Shareholders of RGTC stock got one Gaiam share for every 10 of their own (Gaiam's stock was worth about $16 a share at the time), plus a gift certificate worth up to $100 of Gaiam's "green living" products.
Under Gaiam, Real Goods grew through acquisitions, borrowing $20 million from its parent, which the proceeds of this IPO will help to repay. Gaiam's stake in Real Goods is currently worth about $79.3 million, or more than nine times the value of Real Goods Trading when Gaiam bought it seven years ago.So Gaiam is the big winner in Real Goods' IPO. Also coming out ahead is Real Goods itself, raising $55 million in a dodgy IPO market with a ludicrous valuation. DODGY??? And investors in the IPO? Until Real Goods starts delivering on its pledge to push up profit margins, they are likely to grow increasingly disenchanted with the price of the stock.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV