Please ensure Javascript is enabled for purposes of website accessibility

Why SunPower Corporation Stock Soared 15%

By Rich Smith - Sep 18, 2018 at 2:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Trump tariffs won't touch SunPower.

What happened

Worries that Trump Administration's tariffs on solar panels manufactured abroad would hurt American solar companies have weighed on SunPower (SPWR 2.01%) stock this year. From a high near $10, SunPower had fallen by as much as one-third through the close of trading yesterday.

But that was yesterday. Today, SunPower stock is soaring -- up 15% as of 1:20 p.m. EDT on Tuesday after a company statement confirming that SunPower has won exemption from the tariffs on its solar panels.

Up to 30% off spelled out in big red letters

Thanks to President Trump, SunPower's solar panels could soon be 30% cheaper than the competition's. Image source: Getty Images.

So what

As Reuters reports, SunPower produces most of its solar cells and modules in Mexico and the Philippines -- not China, the focus of the trade war -- before importing them into the U.S. for installation as solar panels. What's more, SunPower management has been arguing to the U.S. Trade Representative (USTR) that its products are of higher quality than "cheap, commoditized imports" from China.

Today, that argument won out, and SunPower confirmed that on Wednesday, the USTR will announce that "SunPower's highly differentiated IBC cells and modules are excluded from tariffs" of up to 30%.

Now what

By being able to sell its solar panels for 30% less than what rival importers must charge, SunPower will gain a great advantage. And by creating a lot of padding between the prices SunPower can charge, and the prices rivals now must charge, it could give SunPower room to charge more for its panels going forward -- creating the potential for fatter profit margins.

Greater sales potential, and greater margin potential as well? No wonder investors are pleased.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SunPower Corporation Stock Quote
SunPower Corporation
$16.27 (2.01%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.