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Why Sunrun Inc.'s Shares Plunged 17% in October

By Travis Hoium – Nov 8, 2016 at 5:15PM

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Ahead of earnings, investors aren't very bullish on Sunrun Inc.'s shares.

Image source: Getty Images.

What happened 

Shares of residential solar installer Sunrun Inc. (RUN -1.67%) fell 17.3% in October, according to data provided by S&P Global Market Intelligence, as residential solar stocks slid during the month. 

So what 

One of the worrying items that came out during the month was word that San Diego Gas & Electric hit its net metering cap, which means that new fees will be added to solar customers in the future. Soon, other utilities in California, which is the country's biggest solar state, will hit caps that will result in higher fees as well. 

This addition of fees could lead to the solar economics not working as well as they did in the past. And with installers like Sunrun already struggling for customers, it could lead to a rough next few quarters. 

Now what 

We'll find out later this week what the financials of solar today look like and there are both good and bad trends. Sales costs have been rising, which is hurting margins, but solar panel prices have plunged in the last few months, which could lead to higher margins for installers. I wouldn't panic over a stock move that isn't driven by real fundamental flaws, but the trends for Sunrun need to be monitored closely because this is a company with higher costs than many of its competitors in residential solar. 

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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