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SPI Energy Co., Ltd (SPI US)

Year: 2020

SPI Energy Co Ltd is a company mainly engaged in the provision of photovoltaic (PV) solutions for business, residential, government and utility customers and investors. The Company operates through solar energy products and services segment. The types of products and services in segment includes engineering, procurement and construction (EPC) services, sales of PV solar system, electricity revenue under power purchase agreements, trading of PV solar components, pre-development project sales and financial service revenue. It provides a spectrum of EPC services to third-party project developers, and develops, owns and operates solar projects that sell electricity to the grid in countries, including the People's Republic of China, the United States, the United Kingdom, Greece, Japan and Italy. The Solar projects in its portfolio include projects at all stages of development, including projects in operation, projects under construction and projects in pipeline.

After a merger with Solar Power, Inc., SPI Energy Co. began trading on the NASDAQ in January 2016.  A share offering in September 2020 raised US$16M.

October 22, 2020 Grizzly Research released a short report; "SPI Energy Co., Ltd: The Perpetual Pump and Dump – Electric Vehicles Will Be No Different".  Grizzly believed that SPI was an egregious pump and dump company.  It noted that its stock has had a date with almost all the hottest trends in the recent two years, including Cryptocurrency, CBD, and the latest Electric Vehicles.  The reported discussed the following:

  • SFI's stock told a repetitive story of pumping the stock on news of hot strategic establishment, followed by aggressive PR campaigns and ultimately a failing value proposition.
    • In early 2018, SPI launched its cryptocurrency platform, which Grizzly believed had never been operational. It contributed abysmal revenue to date.
    • In September 2019, SPI launched its hemp and CBD business amongst the cannabis hype. Once again, it was followed by multiple PR campaigns. However, the business never came to fruition. In September 2020, it was reported that the whole growth facility would likely be shut down.
  • September 2020, SPI launched a company called EdisonFuture Inc., focusing on the design and development of electric vehicles (EV) and EV charging solutions. Through desktop research and on the ground research, Grizzly presented overwhelming evidence that this would also fail.
    • Most notably, it found out that the key Chinese EV partner did not have any current operations and all business was halted over a year ago. Site visits and calls with distributors confirmed Grizzly's suspicions.
    • Grizzly identified that the CEO of SPI was a wanted fugitive in China. He had also been involved in another public company that went bankrupt prior to joining SPI.
    • The company had numerous convertible bonds in default, indicating poor capital management, poor investment decisions and poor operations.
    • The company’s current auditor was of such low credibility that PCAOB had prohibited them from conducting China Audits.
    • As if their core business wasn’t weak enough, 80% of the company’s core solar revenue, generated by subsidiary Solar Juice Co. Ltd, was at risk due to a lawsuit that occurred in May 2020.

Grizzly saw a clear pattern of pump and dump, riding on trends. With a negative book value of equity, it believed the stock would at best return to previous levels, at worst quickly become another one of the CEO’s bankrupt companies.

Grizzly Research: SPI Energy Co., Ltd: The Perpetual Pump and Dump – Electric Vehicles Will Be No Different, 22 Oct 2020
SPI Energy: Annual Report YE Dec. 2019
SPI Energy: Annual Report YE Dec. 2018
SPI Energy: Prospectus - 30 Sep. 2020