LIAONING, China (

TheStreet

) -- Everything is relative, including market losses. If the recently pummeled solar sector -- and particularly the Chinese solar players -- wanted to feel better about recent losses, they could have looked to alternative energy peer

A-Power Energy Generation Systems

(APWR)

which was down more than 21% on Thursday.

On Friday morning, investors were not done beating A-Power's share price down further, with the Chinese alternative energy player down close to 7% within the first hour of trading -- bringing its two-day share decline near the 30% mark.

It would be an understatement to say that the wind was taken out of wind-turbine player A-Power's sails on Thursday. A-Power began Thursday at $16.98 and finished the day at $13.36, after close to 13 million shares were traded, a huge bearish trading spike over A-Power's normal volume of just fewer than 2 million shares daily.

It is hard to blame investors for the negative outlook on A-Power. A-Power made a capital markets fund-raising decision on Thursday that perplexed investors -- and, still worse, was seen by many as unnecessary.

A-Power announced an $83 million private placement that will dilute shares by approximately 15%.

A-Power issued 5.8 million shares at a discounted price of $14.37 a share, or a 15% discount to Wednesday's closing price. Investors created their own bigger discount on the news of the private placement, with A-Power ending Thursday at $13.36.

Why were investors taken by such surprise by the A-Power decision to issue more common shares and dilute existing shareholder positions?

For one, A-Power said it would use a portion of the $83 million proceeds to help fund its acquisition of

Evatech

, but that acquisition was only $49.9 million.

Further, A-Power did not mention that in its original Evatech acquisition announcement, A-Power said that government subsidies would cover 45% of the acquisition price.

What's more, A-Power has zero debt on its balance sheet, and investors were likely looking for a debt raise from A-Power -- a move that may have made more sense from an investor-relations perspective.

Further, A-Power completed a convertible offering in December, which had already increased the number of outstanding shares. Between the private placement and the convertible exchange in December, 10 million additional shares have been put into the market by A-Power, a company that only has a total of 34.7 million shares outstanding. The private placement also gives institutional investors warrants on an additional 5 million shares.

It may seem to investors that A-Power is making lots of progress on flooding the market with its shares, while making little progress on the big projects that pushed up its share price in the first place.

A-Power had announced in late 2009 a big wind-farm win in West Texas. However, it is still not a definitive agreement, and analysts have previously said that these big wind-turbine farms are notorious for delays.

A-Power's wind business is growing, and presents a bigger opportunity than its distributed generation business in Southeast Asia, where it has biomass plants. A-Power also likely needs to build up inventory for the wind market -- and that's not a cheap inventory.

However, given the recent run-up in the share price of A-Power, and the big talk from A-Power about the West Texas wind farm, investors would have preferred to see more news of progress on the project front as opposed to progress in diluting shares beyond the December convertible announcement.

On Nov. 1, A-Power shares had been at $11. By mid-December, A-Power shares had passed the $20 mark.

A-Power shares were back at $12.47 on Friday morning. And there were a lot more of those shares.

-- Reported by Eric Rosenbaum in New York.

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