SunPower's stock tanks after going-concern warning

By Claudia Assis

SunPower's stock is down 77% this year

Shares of SunPower Corp. dropped more than 30% Monday after the residential solar company spooked investors with a going-concern warning in regulatory filings.

SunPower's stock (SPWR) fell 34% to $4.09, on track for its lowest close since Nov. 28 and its largest one-day percentage decrease since Nov. 5, 2008, when it fell 35%.

The stock is down 77% this year, heading for what is shaping up to be its worst yearly performance since 2016, when it fell 78%. The losses contrast with gains of about 23% for the S&P 500 index SPX and a decline of around 30% for the Invesco Solar exchange-traded fund TAN in the same period.

In filings earlier Monday, SunPower disclosed a breach of covenant due to a delay in filing its 10-Q. As a result, the company's third-quarter filing included going-concern language, warning investors that a failure to reach an agreement with lenders would result in immediate debt repayment of $65.3 million.

"Ultimately while [SunPower] continues to work with creditors to reach agreements on multiple covenant breaches, we see the heightened credit risk [and] potential for dilution continuing to weigh on shares," Truist analyst Jordan Levy said in a note to clients Monday.

SunPower ended its third quarter with about $116 million in cash and equivalents.

In the filings Monday, SunPower said it is seeking additional waivers and evaluating various funding alternatives that could include an equity raise or arrangements with strategic partners.

"As we've previously noted, we see further near-term headwinds to cash flows," especially as the company's inventory is expected to rise in the current quarter, Levy said.

Besides its own troubles, SunPower and other solar-power stocks have been under pressure from higher interest rates and regulatory changes in states such as California, which increased payoff times for residential solar power.

See also: What happened to solar stocks? Investors 'pick up the pieces' after a brutal earnings season

SunPower last month reported third-quarter sales that were below Wall Street expectations and swung to a quarterly loss.

-Claudia Assis

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12-18-23 1344ET

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