Shares of Real Goods Solar, Inc. (OTCMKTS: RGSE) are gaining some speed as they continue to bottom out from all-time lows. The stock had come under immense short selling pressure in 2019, a development that has seen it lose a substantial amount of market value. However, a rally from 52-week lows indicates that the stock has hit the floor and due for a correction higher.
RGSE Stock Catalysts And Price Analysis
The spike from all-time lows follows the confirmation that the Company is exploring strategic alternatives with a view of maximizing shareholder value. The Company has already existed the unprofitable legacy solar business a part of an effort of reducing cash outflow to maximize on opportunities that have the potential to generate shareholder value.
The manufacturer of POWERHOUSE Solar Shingle System has since carried out a capital raise of $3.3 million, poised to finance strategic initiatives geared towards accelerating growth. The developments have gone well with investors, seen as one of the reasons why the stock has started surging after succumbing to bearish pressure in the first quarter.
The $0.07 mark has since emerged as a critical support level from where the stock has bottomed out as a bounce-back play. A 90% plus rally from the lows has opened the door for the stock to continue powering high as part of the emerging uptrend.
After the recent spike, Real Goods Solar is staring at the $0.20 mark as the immediate resistance level standing in the way of further upside action. Given the underlying long-term bear trend, the stock will have to rally and stabilize above the $0.40 mark to turn bullish.
Below the $0.40 technical level, the stock remains vulnerable to further drops in continuation of the bear trend that began last year.
What Does Real Goods Solar Do?
Real Goods Solar bills itself as an original solar company. It operates as a residential and small business commercial solar energy, engineering, procurement, and construction company. The Company’s lead product is POWERHOUSE, an innovative in-roof solar shingle.
New Corporate Strategy
Real Goods Solar has started bottoming out from all-time lows on reiterating a new corporate strategy focused on optimizing shareholder value. The Company has made significant strides as part of an effort of reinventing itself around the POWERHOUSE solar shingle, which is poised to be a key driver of the bottom line going forward.
“Acknowledging our previously stated view that it will require time, years, in fact, to grow the POWERHOUSE™ brand and revenue streams. To ensure we are best positioned to address this opportunity with increased television advertising, services, access to customer bases, access to capital, and the like. We believe now is an opportune time to consider whether pursuing complementary paths may enhance shareholder value,” stated CEO Denis Lacey.
Some of the other strategic alternatives the Company is considering as part of an effort of delivering shareholder value include the sale of the RGS Energy. The management is also eyeing business combination such as mergers or a strategic investment financing.
The realignment comes on the heels of Real Energy Solar exiting the residential solar business as focus shifts toward the POWERHOUSE in-roof shingle business. The exit should allow the Company to reduce overall cash outflow as part of an effort of maximizing shareholder value.
By focusing on POWERHOUSE, the Company is planning to take advantage of a vast market opportunity in response to California requiring all new homes built, to come with solar installation. The solar shingle has a strong competitive advantage that should allow it to enjoy great success in the market.
In the recent past Real Goods, Solar has closed a $3.3 million registered offering. With the new finances, the Company remains well financed to pursue new strategic alternatives as part of an effort of growing shareholder value.
Real Goods Solar has started showing signs of bottoming out after a harrowing crash in the first quarter. The confirmation that the Company is focused on new strategic alternatives geared towards generating shareholder value should continue to shore up market sentiments.
A phenomenal run in recent weeks could as well signal that the stock has hit the floor and due for a correction higher as a bounce-back play. The stock is likely to continue gaining some ground as the upward momentum continues to gather pace.
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Disclosure: We have no position in RGSE and have not been compensated for this article.