Ram Power Corp (TSE:RPG) (PINK:RAMPF) stock price was shaken by recent news and currently trades near an important support level, looking to break down into a new multi-year low.
RPG gapped down 16.85% yesterday on strong volume of 2.27 million, which was nearly 4 times the average. News was mixed lately, but this particular event was called out by a units offering disclosure made on April 26.
The shares continued to decline in value after the company offered for sale $50 million worth of common shares and warrants combinations.
Just a day before, the price was kept in place by a positive update on the completion of two wells drilling, targeting to make use of geothermal energy on San Jacinto-Tizate project in Nicaragua and Orita project in California.
These two developments are affecting the share price in different ways. It is currently at a very important support. If it breaks further down, a major collapse could happen if selling pressure proves to be stronger.
A renewable energy company is running on a fundamentally impaired balance sheet, that’s why they desperately need more cash.
- Revenues are flat;
- Quarterly losses decrease, but remain significant;
- Capital structure is far from optimal – most of the capital is concentrated in hard assets, leaving comparatively little liquid assets at management’s disposal;
- Short term liabilities top current assets.
Losses are mostly offset by issuing more debt. This causes potential dilution and on top of that the company turned to equity funding, thus a negative reaction is understandable.
The only good thing is that the market cap currently stays at only a third of the net tangible worth of the business. This might prove to be a good buying opportunity if Ram Power manages to pull it together.
