What happened
Point-of-sale solar financing company Sunlight Financial Holdings (SUNL) saw shares plummet more than 30% as of 12:05 p.m. ET today after reporting earnings results for the second quarter of the year.
So what
Sunlight reported earnings per share of $0.05 on total revenue of $31.6 million. Earnings were in line with analyst estimates, while revenue missed expectations.
"I'm proud of Sunlight's strong performance in the second quarter. Despite continued industry challenges with supply chain and labor constraints, we exceeded quarterly records for funded volume, number of borrowers served, and average solar loan balances due to strong demand for Sunlight's products," Sunlight's CEO Matt Potere said in an earnings statement.
He added, "This performance continues to demonstrate the value of our profitable, capital-light, cash-generative business model."
However, Sunlight also lowered its full-year guidance due to market volatility and rising interest rates. The company now expects full-year funded loan volume to come in between $2.8 billion and $3 billion, full-year revenue to come in between $130 million and $140 million, and full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to come in between $35 million and $40 million.
Now what
It seems like Sunlight ran into some funding issues in the quarter, which isn't uncommon for lenders that don't hold loans on the balance sheet in this kind of rising interest rate environment.
But it seems like more of a one-off situation because the company still had a record number of funded loans in the quarter.
While Sunlight is dealing with difficult near-term market conditions, it is profitable and has positive adjusted EBITDA. I don't see this as a strong buy right now but do see things I like about the company that give it decent long-term potential.
