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Why Shares of JinkoSolar Holding Popped 13.3% Today

The Motley Fool
The Motley Fool
 2022-01-26

What happened

Shares of solar energy stock JinkoSolar Holding Co (NYSE: JKS) jumped as much as 13.3% in trading on Wednesday after the company announced that one of its subsidiaries completed an IPO in Shanghai. Shares fell slightly later in the day but are still up 7.5% at 1:20 p.m. ET.

So what

Jinko Solar Co., or Jiangxi Jinko, completed an IPO on the Shanghai Stock Exchange that issued 2 billion shares at RMB 5.00, or $0.79, for a total of $1.58 billion. But after the first day of trading shares had jumped 111%, causing the increase in JinkoSolar Holding today.

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Image source: Getty Images.

This is the latest solar company to spin off manufacturing assets, which have been difficult to make money on long-term. Manufacturing is competitive and requires billions of dollars in investment to build scale, which is why a company like JinkoSolar may want to focus on power plant development at a corporate level.

Now what

The market's reaction to Jiangxi Jinko is what's exciting investors today and could give JinkoSolar flexibility. The company could fully monetize its 58.62% stake in Jiangxi Jinko and return capital to shareholders, which may be appealing given JinkoSolar's current $2.1 billion market cap. No matter the decision, a successful IPO is welcome news for a struggling solar market today.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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