Why LDK Solar's Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of LDK Solar fell 11% today after the company issued its first-quarter earnings report.

So what: Sales during the quarter were just $104.3 million on shipments of 240 MW of wafers and 31.4 MW of cells and modules. Net loss was a whopping $187.1 million, or $1.21 per share.

Now what: LDK has nearly $3 billion in debt and a $58 million quarterly interest expense to go along with it. With just $104 million in sales there's no way to pay off that debt, and the only possibility for survival is a bailout from China. The company may not fail the way a U.S. company would; it's propped up by Chinese banks and is not a company any investor should be betting on right now.

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The article Why LDK Solar's Shares Dropped originally appeared on Fool.com.

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Originally published