Shares of residential solar company SunPower (SPWR 5.85%) fell as much as 41% on Monday after it filed updated quarterly and annual filings and said that there's a question it will be a "going concern." This is a warning companies give when it's uncertain if they can continue operations given their current financial position.
SunPower stock recovered slightly in early afternoon trading and is down 37.1% at 12:10 p.m. ET.
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What's happening at SunPower
SunPower said it would restate financial results in October because inventory was incorrectly accounted for at a subsidiary. This caused a delay in third-quarter results being filed, which caused a technical default on outstanding debt.
Some debtholders could have immediately called their debt, but on Dec. 8, 2023, the company received a waiver that not only brought the company out of technical default, but also allowed the company to access $75 million in funding. Now, SunPower has until Jan. 19, 2024, to shore up its finances or receive further waivers or we could see a default again.
SunPower's precarious position
The immediate warning may be a short-term challenge for SunPower, but the company's position is no less precarious. Operations burned $111.7 million in the first three quarters of 2023 and that isn't likely to reverse during the winter months.
One reprieve could come from falling interest rates over the last week, which could make it more economical to install solar panels on roofs. But that recovery may take multiple quarters and SunPower's cash crunch is now. At the least, SunPower's risks are front and center today.
