Workers install solar panels during a SunPower installation on a home in Napa, California, US, on Monday, July 17, 2023.
David Paul Morris | Bloomberg | Getty Images
SunPower stock collapsed more than 40% this week after the company informed dealers that it will no longer support new leases, installations or product shipments, with analysts largely writing the company off as on the verge of going out of business.
The residential solar installer told dealers that it recognizes “the gravity” of the decision and is looking for alternative providers to transfer sold projects, according to a July 17 letter obtained by the firm Roth MKM.
SunPower stock has lost nearly all of its value the last 12 months, with shares down nearly90% to close at $1.51 on Thursday. Guggenheim Securities has slashed its price target to $0 from $1 previously. The stock was down to $1.35 in premarket trading Friday.
“We think this effectively marks the end for SPWR as an operating business,” Guggenheim analysts Joseph Osha and Hilary Cauley told clients in a Friday note. “Considering the debt that the company has accumulated, we believe that SPWR’s equity no longer has any value.”
CNBC reached out to SunPower for comment.
Sunpower
SunPower is likely “entering a winddown process” that will end in the sale of its remaining assets and the delisting of its stock, the Guggenheim analysts said. JPMorgan sees the decision as an “indefinite suspension” of SunPower’s future dealings, according to a Wednesday note.
The decision to effectively suspend operations is the result of SunPower’s weakened cash flow and balance sheet as well as its inability to tap capital markets because the company is not current with the Securities and Exchange Commission, JPMorgan analysts led by Mark Strouse told clients.
Piper Sandler suspended its coverage of the stock after the news.
SunPower had 524 megawatts in system installations and component sales in 2023, according to Guggenheim. This presents a significant opportunity for competitors with Sunnova likely to benefit due to its similar dealer focused model and its emphasis on growth, according to Guggenheim.
The residential solar sector has been under significant pressure as high interest rates have depressed demand and left companies with too much product on hand. While the sector was hoping for relief this year, stubborn inflation has resulted in the Federal Reserve holding interest rates higher for longer than the market originally expected.
Residential solar has faced the added headwind of growing political uncertainty in the U.S. with the presidential election around the corner. The industry has benefited from tax credits under the Inflation Reduction Act under the Biden administration.
With the Trump campaign gaining momentum, however, there is growing concern among investors that Republicans could sweep the White House and Congress, putting them in a position to potentially dismantle the IRA.