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Why Maxeon Solar Technologies Stock Dropped 12.9% on Thursday

By Travis Hoium – Nov 18, 2021 at 5:04PM

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Losses continue to pile up for this solar manufacturer.

What happened 

Shares of solar panel manufacturer Maxeon Solar Technologies (MAXN 2.05%) fell as much as 18.7% in trading on Thursday after the company reported earnings. Shares closed trading down 12.9% on more than triple the average daily volume. 

So what

Third-quarter 2020 revenue was up 6.7% from a year ago to $220.5 million but the company reported a gross loss of $16.7 million, which is a negative 8.3% gross margin. Net loss according to generally accepted accounting principles (GAAP) improved slightly from a year ago to $66 million.

Home with solar panels on the roof.

Image source: Getty Images.

Adjusted earnings before interest, taxes, depreciation, and amortization EBITDA was a negative $33.1 million and even if we were to pull out $19 million in costs or losses due to polysilicon contracts, the company would still have lost about $14 million on an EBITDA basis. 

Now what

There's not a lot to like here from Maxeon. The company is reporting negative margins at a time when most solar manufacturers are seeing strong margins and profitability. After all, demand for solar is higher than ever and high fossil fuel prices have put less price pressure on the industry. 

It seems that Maxeon is having the same cost problems it's had for most of the last decade, unable to charge a premium for its products that would enable profitability. Management is upgrading capacity to improve profitability, but not fast enough, and until we see better results this is a tough solar energy stock to own. 

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

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