Why SunPower Shares Fizzled Out

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar-panel maker SunPower (NASDAQ: SPWR  ) were burning up today, falling as much as 10%, after its quarterly earnings report missed expectations.

So what: SunPower said the supply glut in solar panels contributed to lower prices and a bigger net loss in the fourth quarter versus a year ago. The company had earnings of -$1.22 per share, down from -$0.94 a year ago, while analysts had expected a loss of just $0.78 a share. Revenues grew modestly, by 8%, to $678.5 million. Prices for photovoltaic panels were down 31 percent industrywide, falling to $0. 64 a watt, and have put added pressure on a fragmented industry. CEO Tom Werner was confident though, saying that SunPower had a strong pipeline of about 1 gigawatt of projects, and was optimistic about the industry, adding:

Three to four years out can we compete with conventional energy sources with no or minimal incentives? The answer is yes.

Now what: The solar industry may seem to be an appealing investment, as consumption of the energy source is certainly growing, but investing in individual solar stocks seems like too much of a game of chance. Just like there were hundreds of automobile companies in the U.S. at the dawn of the combustion engine, the solar industry seems to be at the same precarious point, and will need consolidation and the herd to be thinned in order for the industry to thrive. Like its competitors, SunPower seems to essentially be a commodity service, and racking up losses like the ones we saw last quarter certainly won't make it any more of an appealing investment.

For more info on SunPower, add the company to your Watchlist here.


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12/19/2014 4:00 PM
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