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Why SunPower Corp. Shares Plunged 12% Today

By Travis Hoium - Feb 15, 2018 at 11:57AM

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Fourth-quarter earnings were fine, but the solar manufacturer's 2018 guidance wasn't what investors wanted to see.

What happened 

Shares of solar manufacturer SunPower Corp. (SPWR -1.01%) fell as much as 12.4% in trading Thursday morning after it reported fourth-quarter earnings and high-level 2018 guidance. The guidance figures left a lot to be desired for investors, and as of 11:54 a.m. EST, shares were still down 9% on the day. 

So what

SunPower's Q4 revenue was $658.1 million, and its net loss was a whopping $568.7 million, or $4.07 per share -- though that was driven by a one-time charge. On a non-GAAP basis, revenue was $824.0 million and earnings were $35.8 million, or $0.25 per share, which beat the Wall Street consensus estimate of $0.11 per share. 

Solar carport with cars under it.

Image source: SunPower.

SunPower also took a $473.7 million charge related to the anticipated sale of lease assets. The company will sell all the residential leases on its balance sheet; it expects to collect $200 million in cash and reduce debt by $436 million as a result. 

What traders seem to have focused on today was the 2018 guidance for revenue in the $1.8 billion to $2.2 billion range, below analysts' consensus estimate of $2.4 billion. Management also said adjusted EBITDA would be positive, but didn't give gross margin guidance for the year, so there's uncertainty in the operating metrics for investors. 

Now what

SunPower is dealing with a transition to a business model more focused on component sales rather than system development, which is wreaking havoc on its balance sheet and income statement today. But the focus is on reducing debt and simplifying the business long term. On that front, the company is making progress. However, given the bumps it's liable to face along the way, 2018 presents enough uncertainty that investors are jumping ship today. 

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