What happened 

Shares of solar energy stock Sunworks (NASDAQ:SUNW) jumped as much as 39.3% in trading Wednesday after releasing preliminary fourth-quarter 2020 results. Shares gave back some of those gains late in the day but were still up 23.4% at 3:15 p.m. EST. 

So what

Quarterly revenues are estimated to be $8.5 million with a gross margin of 16% to 17% and a net loss of $5 million. For the full year, revenues are expected to be about $38 million with a net loss of $16 million.

Home with solar panels on the roof.

Image source: Getty Images.

Management highlighted the fact that Sunworks' cash balance was $39.4 million with a backlog of $42.6 million. That should keep the company afloat long enough to institute its growth initiatives. 

Now what

Sunworks has been one of the hottest stocks in solar energy, but you can see that the company is still losing money and has an uphill battle against large competitors. While this could be a high-performing stock if it can break out of its small niche in solar, I think the odds are stacked against it. Traders love the numbers coming out today, but I see losses mounting, and that needs to improve in 2021 before I'll jump on the stock. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.