What happened
Shares of SunPower fell 35.6% in February, according to data provided by S&P Global Market Intelligence, after the company reported earnings and solar energy stocks went through a general sell-off. But it wasn’t all bad news for the solar company.
So what
Fourth-quarter results showed a 14.9% rise in revenue to $341.8 million and adjusted net income of $26.6 million, or $0.14 per share, which actually beat estimates from Wall Street. And management said that revenue would grow 35% in 2021, an incredibly high rate for a solar company.
But the market wasn’t pleased, in part because SunPower’s stock has come so far over the past year. Shares are up 494% in the past year, even after the recent drop in shares. So a pullback shouldn’t be surprising to investors.
Now what
It didn’t help SunPower, or solar stocks more broadly, that interest rates suddenly came into focus in February. Rates have been rising slowly in 2021 off historic lows, and that’s a headwind for the solar industry. Companies that finance solar projects, like SunPower, benefit from low rates because their cost of financing is lower and they keep more long-term value from projects. So, fretting over interest rates is normal in the solar industry.
Taking a step back, I think interest rates and the run-up in solar energy stocks should be taken with a grain of salt. Rates are still extremely low and will be fuel for solar installations. And stock prices are high, but not crazy given SunPower’s 35% growth rate expected in 2021. Long term, this is still a company I want to own as solar energy proliferates. Last month was just a bump in the road.