Workers install SunPower solar panels on a home in Napa, California, on Monday, July 17, 2023.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
solar power The company’s stock price plummeted 70% this week after the company informed dealers that it would no longer support new rentals, installations or product shipments, and most analysts believed that the company was about to go bankrupt.
According to a July 17 letter obtained by Roth MKM, the residential solar installer told dealers it recognized the “seriousness” of the decision and was seeking alternative suppliers to transfer sold projects.
SunPower shares have lost almost everything in the past 12 months, falling 93% to 79 cents on Friday. Guggenheim Securities has lowered its target price to $0 from $1 previously.
“We believe this effectively marks the end of SPWR as an operating business,” Guggenheim analysts Joseph Osha and Hilary Cauley told clients in a note on Friday. “Given the debt the company has accumulated, we believe SPWR’s equity no longer has any value.”
CNBC reached out to SunPower for comment.
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Guggenheim analysts said SunPower is likely to “enter a tapering process” that will ultimately see it sell off its remaining assets and delist. JPMorgan Chase & Co. believes the decision will “indefinitely pause” SunPower’s future trading, according to a report on Wednesday.
JPMorgan analysts led by Mark Strouse told clients that the decision to suspend operations was actually due to SunPower’s weak cash flow and balance sheet, as well as the company’s inability to tap capital markets due to the company’s failure to stay in touch with the U.S. Securities and Exchange Commission.
Piper Sandler suspended coverage of the stock after the news broke.
According to Guggenheim, SunPower will have 524 MW of system installations and component sales by 2023. This provides competitors with a significant opportunity Sannova Guggenheim said the company could benefit due to its similar dealer-focused model and focus on growth.
The residential solar industry has been under intense pressure as high interest rates dampen demand and leave companies with too much product on hand. While the industry hopes for some relief this year, stubborn inflation has led the Fed to keep interest rates longer than markets initially expected.
As the U.S. presidential election approaches, residential solar faces additional headwinds from growing U.S. political uncertainty. The industry benefits from tax credits under the Biden administration’s Inflation Reduction Act.
However, as Trump’s campaign gains momentum, investors are increasingly concerned that a Republican sweep of the White House and Congress could disband the IRA.
