Shares of Vivint Solar (VSLR) plunged as much as 10.9% in trading on Wednesday as its acquirer, Sunrun, dropped as much as 11%. Sunrun is exchanging 0.55 shares of its stock for each share of Vivint Solar, so it makes sense that the stocks are trading together. At 2:10 p.m. EDT, shares of Vivint Solar were down 10.4% on the day.
Today's move isn't driven by any big change in operations but rather in the index that Sunrun trades in. It was announced yesterday that next week, Sunrun will join the S&P MidCap 400 index and exit the S&P SmallCap 600 index. This can lead to investors trading out of a stock if they're running an index fund or one of these indices is their benchmark.
Vivint Solar is moving in lockstep with Sunrun's shares today. That's important to note because it means investors think it's highly likely that the merger will go through as planned.
I wouldn't read too much into the moves by Vivint Solar or Sunrun today. Nothing has changed about the long-term investment thesis for these companies, and their increased size after merging could make them a powerhouse renewable energy company. Today's move lower is just a blip in that long-term story.