What happened

Much like Monday, Tuesday's looking like a bit of a split market, with staid Dow Industrial stocks gaining more than 1% in early trading, but go-go Nasdaq equities continuing to stumble. In particular focus this morning are alternative energy plays: Plug Power (NASDAQ:PLUG) in the hydrogen fuel cell sector and merging solar providers Vivint Solar (NYSE:VSLR) and Sunrun (NASDAQ:RUN).

As of 10:45 a.m. EDT, Plug shares are down 4%, Vivint Solar is off 8.2%, and Sunrun has declined 8.5%.

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

Why is this happening? In Plug's case, there being no other news to explain its sell-off, I think we're just seeing a bit of profit-taking after the stock's fantabulous 29% rise since beating earnings last week.  

The situation with Vivint and Sunrun is a bit more complicated. As you're no doubt aware, Sunrun announced a deal to buy Vivint last month. On the one hand, this is a great deal for both companies inasmuch as their merger eliminates competition between them -- and creates a de facto monopoly in residential solar panel installation in the U.S. On the other hand, until the merger happens, bad news for one company can mean bad news for both stocks, and Sunrun had some bad news to report last night.

Specifically, Sunrun's Q2 2020 earnings that were expected to reveal a profit of $0.16 per share saw a loss of $0.11 per share instead. Sales came in ahead of expectations, but Sunrun -- which was supposed to be the more profitable of the two halves of this merger -- failed to turn those sales into any profits at all.  

Now what

Customer agreements revenue at Sunrun grew 15% year over year, but with solar installations (measured in megawatts deployed) falling 24% during the second quarter of the Great Lockdown, solar energy system sales declined a steep 33%, dragging total revenue down 11% year over year.  

Sunrun, probably preoccupied with trying to bring its Vivint acquisition to a successful conclusion, didn't venture to give specific guidance for what investors can expect, profit-wise, later this year. Management did, however, sound one hopeful note, advising that "order volumes have increased significantly" and are back "above February levels." Management is hoping to see megawatts deployed grow more than 20% sequentially in Q3.

This would seem to imply about $90.2 million from that revenue channel. If customer agreements revenue climbs similarly, sales might approach $218 million for the quarter -- more than the $205 million Wall Street is expecting.

And if that happens, it's entirely possible that the sell-off we're seeing today in Sunrun and Vivint shares is actually a buying opportunity.