Is SolarJuice Co. Ltd. IPO a Good Buy?

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Contributor, Benzinga
July 28, 2023
BZ

Key Takeaways:

  • SolarJuice provides solar photovoltaic-based energy solutions for residential and small commercial building markets in Australia and the U.S.
  • Its upcoming public market debut carries several advantages, including a large addressable market and ideological underpinnings.
  • Macroeconomic and geopolitical forces both buttress and stonewall SJA stock, forcing investors to take a careful approach with this debut.

Every second that passes, the sun emits 400 trillion trillion watts of solar energy. Put another way, in the time that it takes to shut down a smartphone, the sun already produced enough energy to power roughly 500,000 years of current global consumption needs. Leveraging this extraordinary and effectively limitless source of energy for practical applications undergirds the main narrative of SolarJuice Co. Ltd., a specialist in the field of solar photovoltaic (PV) solutions.

Filing for an initial public offering (IPO) — or the first time a private enterprise distributes its equity shares to retail investors — SolarJuice seeks to expand the breadth of its business footprint. Currently, the company serves residential and small commercial building markets in Australia and the U.S. under three main units: SJ Australia, SJ America and SJ Technology. Additionally, SolarJuice distributes PV modules, solar energy inverters, batteries and storage devices. As well, it offers roofing contractor services.

The main relevancies for SolarJuice center on reducing utility bills for households, a particularly important attribute considering skyrocketing inflation. The company facilitates energy resilience, providing power backup systems in case disruptive events such as rolling blackouts materialize.

On the other hand, SolarJuice may face significant pressure from macroeconomic headwinds, especially as it relates to the labor market, which may then impugn consumer sentiment. Additionally, solar energy — while offering effective alternatives for millions of families — is not the most reliable source based on capacity factor.

Therefore, investors must carefully weigh the pros and cons of the SolarJuice IPO before making a final decision. Below are several factors to consider.

What Does SolarJuice Do?

SolarJuice is a provider of solar PV-based energy solutions, primarily for residential and small commercial building markets in Australia and the U.S. The company’s wholesale and distribution business — which covers elements such as PV modules, solar energy inverters, batteries and storage devices — is available in every state and territory of Australia.

Closer to home, SolarJuice represents a roofing contractor — specializing in the reselling and installation of solar energy systems for residential and commercial customers — in five states, which are California, Colorado, Florida, Nevada and Texas. The company designs, manufactures and sells PV modules and related products to customers.

According to SolarJuice’s Form F-1 filed with the U.S. Securities and Exchange Commission (SEC), the company operates three main business units.

  • SJ Australia: SJ Australia is a leading wholesaler of PV systems and components in the namesake market. This unit also designs and sells its own private brand of PV products under the trade name Opal, including Opal solar modules and Opal Storage batteries.
  • SJ America: SJ America installs solar energy systems, energy storage solutions and roofing products in five states. For solar and re-roofing projects, the unit manages the entire process from surveying, design, permitting, installation, final inspection and connection to the power grid.
  • SJ Technology: SJ Technology produces and sells solar PV modules in the U.S. market. A new unit, this business opened its first U.S. solar module assembly factory in January 2022.

Per the company’s IPO prospectus, SolarJuice anticipates tremendous growth in the solar panel installation market. Specifically, it cites four factors that could be favorable to its expansionary efforts:

  • Declining costs of residential solar energy systems and energy storage that make the technology more competitive with local electricity rates
  • Consumer demand for energy storage systems to increase energy resiliency and provide backup power during natural disasters
  • Consumer demand for environmentally friendly, renewable energy solutions
  • Government support and incentives for renewable energy solutions

As for SolarJuice’s competitive strengths, the leadership team cites the offering of end-to-end clean energy solutions for residential and small commercial clients. Familiarity with the Australian solar market and advanced acumen in the U.S. rooftop contracting sector may bode well for the company’s upcoming IPO.

When is the SolarJuice IPO Date?

Initially, SolarJuice filed confidentially on June 11, 2021, regarding its intentions to go public. On Sept. 16, 2022, management filed its Form F-1 with the SEC regarding its plans to raise up to $40 million in the upcoming new listing. However, the company did not provide a specific date for inclusion in the IPO calendar, meaning that investors must exercise some patience.

Still, this circumstance also gives extra time for prospective participants to conduct their due diligence, which is necessary since several details remain up in the air. As of this writing, SolarJuice did not provide any pricing terms, preventing assessment of its valuation. However, the company does plan to list on the Nasdaq exchange under the ticker symbol SJA. In addition, Maxim Group LLC represents the sole bookrunner for the deal.

Looking ahead, SJA stock sits atop opportunities and challenges from an administrative perspective. The IPO calendar remains incredibly light compared to the prior two years. With 2022 incurring early the twin shocks of a massive military conflict in Eastern Europe along with skyrocketing inflation that stymied consumer and investor sentiment, not many people had the appetite for new public listings.

Data from FactSet provides all the context market participants need. In 2021, 1,073 companies made their public debut in U.S. exchanges, collectively raising $317 billion. However, in the first half of this year, only 92 companies launched their IPOs, resulting in a paltry total raise of just under $9 billion.

On one hand, the lack of competition will likely make SJA stock stand out when such a small offering normally would fall by the wayside. But from another angle, the steady erosion of value in the benchmark equity indices implies that few want to participate in risk-on endeavors.

What Analysts Are Saying About SolarJuice IPO

As a sub-$50 million offering, not many analysts are paying attention to SJA. Nevertheless, it’s relatively straightforward to extrapolate the pros and cons of the SolarJuice IPO.

On the positive end of the spectrum, SolarJuice enables households to reduce their utility bills. While solar panel installations require an initial upfront cost, over time, conversion to solar energy pays for itself. On average, the breakeven point will come between nine to 12 years.

Second, SolarJuice empowers energy resilience. Through the sale of batteries and storage devices, residences and commercial enterprises can keep the lights on through various disruptions such as rolling blackouts. Not only that, the memory of significant power disruptions in states like California — a market that SolarJuice serves — should spark greater-than-normal interest.

Third, the pivot to clean and renewable energy sources aligns with geopolitical trends. Following Russia’s invasion of Ukraine, European leaders began fast-tracking green energy infrastructure initiatives to help mitigate the coming disruption of hydrocarbon energy inflows. Such sentiments can trickle down to the residential and small-enterprise levels, thus boosting SJA stock.

On the flip side, SolarJuice is not without significant obstacles. Primarily, the Federal Reserve’s response to soaring inflation — namely raising the benchmark interest rate aggressively — may lead to a recession. If so, consumer sentiment for solar integration will likely fade.

In addition, solar energy might not represent the panacea that its advocates believe it is. Based on the capacity factor (or the reliability of energy sources to produce max power over a given time period), solar energy ranks as the least reliable at 24.9%.

Lastly, geopolitical dynamics themselves — particularly the cutting off of energy supplies — create financial hardships for millions of households. This factor may impede solar integration, thus hurting SJA stock.

SolarJuice Financial History

Providing a mixture of positive and challenging reads, SolarJuice in the six months ended June 30, 2022, generated revenue of $81.5 million. This figure represented a 7.5% lift against the prior year period. The company posted an operating loss of $4.44 million in the most recent half-year period, a favorable outcome from the operating loss of $6.78 million one year ago. Still, investors will eventually want to see positive figures in the bottom line.

On the balance sheet, SolarJuice features cash and equivalents of $3.24 million while carrying no long-term borrowings. Therefore, it might have some flexibility to absorb limited economic pressures.

SolarJuice Potential

An enticing opportunity, SJA stock may attract certain investors looking to make a speculative play on the future of energy. Issues such as geopolitical crises and climate change help bolster SolarJuice’s profile. Prospective participants must also realize that this segment is extremely competitive. Therefore, you should not risk more money than you can afford to lose.

Where to Buy SolarJuice IPO Stock

If you want to participate in SolarJuice’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of the best brokers to consider

SJA Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

Factors to Consider

SolarJuice Co. Ltd. is offering solar PV solutions for residential and small commercial buildings in Australia and the U.S. Its upcoming IPO has advantages such as a large market and a focus on reducing utility bills. However, potential investors should be cautious because of macroeconomic and geopolitical factors that may impact consumer sentiment and solar energy reliability. Market conditions and competition should also be considered before deciding to participate in the IPO.

Frequently Asked Questions

Q

What does SolarJuice do?

A

SolarJuice is a company that specializes in providing solar energy solutions. It designs, installs and maintains solar panels and systems for residential, commercial and industrial buildings. SolarJuice aims to help individuals and businesses reduce their carbon footprint and lower their energy costs by harnessing the power of the sun.

Q

Where to buy SolarJuice IPO stock?

A

To buy SolarJuice IPO stock, you can use online platforms or traditional brokerage firms. It is important to research the company and market conditions and consult with a financial advisor before investing.

Q

Should I buy the SolarJuice IPO?

A

When deciding whether to invest in an IPO like SolarJuice, it is crucial to conduct extensive research and analysis. This process includes evaluating the company’s financial status, competition, potential for growth and market conditions. Seeking advice from a financial adviser who can offer personalized guidance based on individual circumstances and investment objectives can also be beneficial.

SJA Pre-IPO

At the time of writing, no pre-IPO opportunity has been announced for SJA stock. However, those interested in early bird prospects should consider opening an account with ClickIPO.com.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.