Sunlight Financial (NYSE: SUNL) stock should rise 2,000% at the open. SUNL stock is not, sadly, moving up because management has suddenly found a solution to the corporate problems. This is, instead, a purely technical move. One that will have no direct effect upon the value of the company itself or any holding in it. Sorry about that for those who have lost 95% holding it over the past 12 months but that’s the truth here. That 95% decline is also the reason for the turnaround today - the one caused the other.
Sunlight finances solar installations: “Sunlight Financial Holdings Inc. operates a business-to-business-to-consumer technology-enabled point-of-sale financing platform in the United States. Its platform is used to provide secured and unsecured loans for homeowners originated by third-party lenders to purchase and install residential solar energy systems, and other home improvements.”
Sunlight Financial has also been caught, badly, by rising interest rates: “Since the second half of 2022, most of Sunlight’s Funded Loans have been Indirect Channel Loans held by the Bank Partner on its balance sheet until directed by Sunlight to sell these Loans to Indirect Channel Loan Purchasers. This has significantly increased Sunlight’s economic exposure and impacted Sunlight’s ability to generate cash when it is not able to sell these Loans (a) at or above previously forecasted pricing, (b) at or above Sunlight’s cost basis in these Loans, or (c) within previously forecasted timeframes.” As interest rates have risen holding those loans on book before resale has meant considerable losses. There’s a substantial going concern problem here. There’s always the view that as the interest rate cycle is peaking that this problem will cease but, well, maybe not soon enough to keep Sunlight alive.
Sunlight Financial stock price from Google Finance
All of this leads to a technical problem - being below the $1 minimum bid price to stay on the NYSE. There’s no particular reason for this other than that the US markets regard penny stocks as being disreputable. It’s custom, fashion, more than anything else. But it exists as a rule - therefore something must be done. The something is a reverse stock split: “(“Sunlight Financial”, "Sunlight" or the “Company”) (NYSE: SUNL), a premier, technology-enabled point-of-sale finance company, today announced that its Board of Directors approved a 1-for-20 reverse stock split of the Company’s common stock that will become effective at 11:59 p.m. Eastern Time on August 22, 2023.”
And that’s it, that’s all it is too. Sunlight Financial will rise 2,000%, or 20x, at the open this morning. A purely technical matter.
