04:11 PM ET 01/27/2021
Solar equipment supplier Shoals Technologies Group (SHLS) has raised $1.9 billion with an initial public offering that drew heightened attention in a hot market. The Shoals IPO jumped by double digits as trading began Wednesday afternoon.
The company offered 77 million shares, 7 million more than expected, at $25 each, which also exceeds the expected price range of $22 to $23.
Shoals originally planned to distribute 50 million shares at $19 to $21, but raised that to 70 million at the $22-$23 range on Monday.
Shoals stock jumped 23.9%, closing at 30.98 on the stock market today.
Solar stocks have rallied since the election of President Joe Biden, who made green energy initiatives a big part of his campaign. In addition, the outlook for solar stocks is bolstered by investors speculating on an environmental infrastructure boom.
Shoals IPO: Providing Gear For A Hot Solar Market
Based in suburban Nashville, Tenn., Shoals provides an array of gear needed to operate solar energy systems, according to the Shoals IPO filing. Moreover, it provides the components needed to carry electric currents from solar panels to solar inverters and ultimately to the power grid. This includes cable assemblies, wireless monitoring systems, junction boxes, transition enclosures and splice boxes.
The full setup of gear is referred to as electrical balance of system, or “EBOS” solutions.
“EBOS components are mission-critical products that have a high consequence of failure, including lost revenue, equipment damage, fire damage, and even serious injury or death,” the company said in its IPO filing. “As a result, we believe customers prioritize reliability and safety over price when selecting EBOS solutions.”
For the nine months ended Sept. 30, Shoals reported revenue of $136.7 million, up 28% from the year-ago period. Net income was $29.5 million vs. $17.3 million a year ago.
Shoals Follows Array Technologies
The Shoals IPO will follow the initial public offering of Array Technologies (ARRY). Array makes trackers, which adjust solar panels throughout the day to maintain an optimal orientation to the sun. Array managed a head-turning IPO on Oct. 14 that raised $1 billion, and the stock popped 66% on the first day of trading.
The Shoals IPO will trade on the Nasdaq under the ticker SHLS. Also, the lead underwriters are Goldman Sachs, JPMorgan and Guggenheim Securities.
IBD’s Energy-Solar industry group tracks solar energy leaders. Significantly, that group ranked No. 1 on IBD’s list of 197 industry groups on Tuesday. Moreover, the leading stocks in that group are Daqo, First Solar, SolarEdge and Enphase.