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Monday, August 20, 2007

Solarvalue AG: Why has the stock declined?

Shares continue slide from intraday high of 90.90 on July 20, 2007

Ever since Solarvalue goes “Back to the Future” with Moser Baer Photo Voltaic partnership, Solarvalue shares have been driven upward by occasional news and over enthusiastic speculation. Reports like this one from April 10, 2007, Solarvalue keine Stücke aus der Hand geben (Solarvalue don’t sell a single share) helped fuel the stock, but I doubt this was intended to prevent shareholders from selling at €90!

Both an investment from Gartmore in Solarvalue pulls a Secondary and Solarvalue secures TDR Facility for Solar Grade Silicon Production were the latest news moving the stock to its all time high. In other company news, Solarvalue’s offering of 210,000 shares at €64 completed August 10, 2007, (see Solarvalue AG places first tranche of shares for capital increase successfully Total accrual of liquid funds of EUR 13 million expected), was one factor weighing the stock down to the €60’s range. And the subprime lending mess in the US and resulting credit crunch appear to have pushed shares in proportion to its speculative beta to just below €40. The shares of established solar industry players were also hammered last week.

I have been expecting a summer correction of Solarvalue shares before the announcement of Solar Grade Silicon samples or production. But, I didn’t think the shares would fall quite this way. Solarvalue is exhibiting at the 22nd Photovoltaic Solar Energy and Conference Exhibition. In my mind, this would be the perfect venue for Solarvalue to make significant announcements regarding their progress towards production or new customers. Please recall the Moser Baer partnership was announced just before PHOTON’s Photovoltaic Technology Show 2007.

If you favor charts, the above Solarvalue share chart shows a retracement back to €40 (after a Blow-Off top?). Will the stock retest €30 or even €20? The investment by Gartmore should provide support at €40 if world markets stabilize after the recent injections of liquidity. I am considering a small, speculative investment if the stock price becomes attractive. Expect a disclosure statement on my Solarvalue posts if this occurs.

And NEWS FROM RUSE - THE BLOG (Deutsch) has been busy with four (4) new short posts from John Mott since I last checked.

This is the third post in the adverb series: What, Where, and now Why.

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