Please ensure Javascript is enabled for purposes of website accessibility

Why Array Technologies Stock Jumped Thursday

By Howard Smith - May 13, 2021 at 1:23PM

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

The solar energy system manufacturer made two announcements yesterday, and shares tanked.

What happened

Shares of Array Technologies (ARRY -3.59%), a manufacturer of ground-mounted systems for large-scale solar energy projects, are making a bit of a recovery today after a 46% crash on Wednesday. As of 12:40 p.m. EDT, its shares had rebounded 6.4% from Wednesday's closing price. 

So what

Yesterday's drop came after the company reported first-quarter 2021 earnings. Though results weren't far from expectations, the company highlighted growing freight and steel costs when saying it needed to review open contracts amid rising input costs and CFO Nipul Patel said in a statement that the company was "not able to affirm our previously provided guidance for the full year." 

Large solar panel farm in a field

Image source: Getty Images.

Now what

Another announcement the company made yesterday could help address its steel cost issue. Array and Nucor (NUE 1.03%), North America's largest steelmaker, announced a supply agreement that will provide Array a supply of sustainably produced domestic steel for tubing, clamps, foundations and brackets, and other components used in its solar projects

Array CEO Jim Fusaro said in a statement, "As Array invests in innovation and develops technologies that will decrease installation time and bring down levelized cost of energy for our customers, we are proud to say that our products will be made with sustainably sourced materials." 

The agreement didn't provide details on cost or volume, but it would be beneficial for both parties if volume and pricing levels were part of the deal. Array said in its quarterly update it believes the outlook for increasing solar capacity remains strong. Fusaro added that the company would "look for opportunities to use the current environment to play offense by leveraging our size and scale." The deal with Nucor seems to be some of what he's referring to, and investors may be seeing yesterday's sell-off as overblown considering the strength in the overall sector. 

Howard Smith owns shares of Nucor and has the following options: short July 2021 $100 calls on Nucor. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

Array Technologies, Inc. Stock Quote
Array Technologies, Inc.
ARRY
$18.01 (-3.59%) $0.67
Nucor Corporation Stock Quote
Nucor Corporation
NUE
$137.96 (1.03%) $1.41

*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 analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

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.