Jinko and Daqo Withdraw Their Solar IPOs

Sky not falling

Eric Wesoff February 15, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

China-based Jinko Solar withdrew its IPO plans due to "poor market conditions," according to Reuters. We reported on their IPO intentions here.

Jinko manufactures silicon solar wafers, cells and modules and had hoped to raise $100 million. Another China-based polysilicon manufacturer, Daqo New Energy, also pulled its $80-million IPO last month. Obviously, investors are a bit jittery about the solar industry in an environment where slim margins exist for commodity-level wafers and modules -- and where curtailed German subsidies might impact demand while the world waits for the U.S. and other markets to take off.

Here is Jinko and Daqo's revenue situation compared to other greentech IPO aspirants:

Are these two withdrawn IPOs a tocsin for the solar industry and for greentech IPOs in general?

Put simply, no. Daqo and Jinko are money-losing, marginal players in an oversupplied, undifferentiated field.

Solyndra is losing money and will continue to lose money, but the firm is certainly differentiated by technology. They are selling the story of the potential for new and innovative CIGS solar technology. Likewise, Tesla, also losing money, is selling a story that institutional investors might believe in -- unique luxury EVs.

Solyndra still has to contend with the falling price per watt of commoditized silicon. Tesla, on the other hand, as an automotive supplier, faces a market with less clear-cut value propositions. Price and value are only part of the car purchase decision.