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Why SunPower Shares Jumped 12.3% Today

By Travis Hoium – Oct 1, 2021 at 1:15PM

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SunPower is joining the S&P MidCap 400 and that's pushing shares higher today.

What happened 

Shares of solar energy stock SunPower (SPWR 0.14%) jumped as much as 12.3% in trading on Friday after announcing that it will join the S&P MidCap 400 next week. Shares are still up 11.2% as of 12:20 p.m. EDT. 

So what

SunPower will replace Cimarex Energy, which is being acquired by Cabot Oil & Gas, in the index. The change takes effect on Tuesday, October 5, 2021. 

Carport with solar panels.

Image source: SunPower.

The reason shares often jump when announcements like this are made is because funds that follow an index like the S&P MidCap 400 will need to buy shares to get exposure to SunPower stock. That can lead to natural buying from the funds themselves as well as from piggyback investors trying to ride the wave of momentum. 

Now what

There isn't fundamentally any change to SunPower's business today, but there was an obvious trading impact. Investors are betting that being included in a large index will lead to more demand for shares, potentially pushing the stock higher. 

I'm more concerned with third quarter 2021 financial performance, which we will learn about when the company reports earnings later this month or early next month. That's when we'll find out if the company's residential and commercial solar strategy is gaining traction and that's what long-term investors should keep their eyes on. 

Travis Hoium owns shares of SunPower. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

SunPower Stock Quote
SunPower
SPWR
$22.24 (0.14%) $0.03
Coterra Energy Stock Quote
Coterra Energy
CTRA
$24.95 (-2.08%) $0.53
Cimarex Energy Stock Quote
Cimarex Energy
XEC

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

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