Why Shares of Maxeon Solar Technologies Are Plummeting Today

What happened

Uninspired by the second-quarter 2022 earnings that Maxeon Solar Technologies (MAXN -6.79%) reported yesterday after the bell, investors are selling shares in a big way. And it's not only the company's recent performance that is motivating the market. Maxeon's revenue guidance for Q3 2022 is also failing to power investors' excitement.

As of 11:20 a.m. ET, shares of Maxeon are down 20.1%.

So what

Beating analysts' consensus sales estimate of $221.4 million, Maxeon reported $238.1 million on the top line for Q2 2022. At the bottom of the income statement, however, the company failed to surpass expectations. Whereas analysts had expected the company to book a loss per share of $1.60, Maxeon instead reported a loss per share of $2.15.

While investors pay close attention to analysts' estimates, they are also acutely attuned to management's own expectations for future performances. In this regard, it's clear why investors are so disappointed. During the Q1 2022 earnings report, management had forecast a gross loss of $15 million to $25 million for Q2 2022. Failing to meet this guidance, though, Maxeon reported a gross loss of $39.3 million.

Looking ahead, management forecasts sales of $270 million to $290 million -- a more conservative estimate than the $311 million in revenue that analysts expect the company to book.

Now what

Although Maxeon had some success last quarter in achieving 35% year-over-year revenue growth and eclipsing analysts' estimates, investors are more focused on the company's gross loss -- lower than what management had projected and the unexpectedly low loss per share.

The dour sentiment pervading the market now with regards to Maxeon's stock seems a little excessive. This stumble on the way to profitability doesn't seem to warrant the steep sell-off today. The recently passed climate bill presents a major tailwind for solar stocks like Maxeon, and patient investors who recognize the increasing acceptance of renewable energy have an opportunity to scoop up Maxeon's shares at a discount today compared to earlier in the week.