Shares of residential solar installer SunPower (SPWR 5.85%) jumped a whopping 22.1% in trading early on Thursday after the company reported $175 million in financing and fourth-quarter 2023 financial results. At 1:30 p.m. ET shares were down slightly on the day, so the early gains have already evaporated.
The quarter for SunPower
Quarterly results were secondary today, but I'll start there. Revenue was $356.9 million in the quarter and net loss was $115.6 million, or $0.66 per share. SunPower ended the quarter with just $87.4 million in cash and that's where the problems begin for the company.
In 2024, management expects a net loss of $80 million to $160 million for the year with free cash flow turning positive in the second half of the year.
Bigger news for SunPower
More important than quarterly results was $200 million of capital commitments, including $175 million in financing through a series of loans from Sol Holding, a joint venture owned by TotalEnergies and Global Infrastructure Partners that owns a majority stake in SunPower.
What concerned investors, and caused the drop later in the day, was that 75.2 million "penny warrants" were granted as part of the financing round. This will have a massive dilutive effect because the warrants can be exercised for $0.01.
While this answers SunPower's short-term challenges in surviving the solar market's current downturn, it will be very costly for shareholders and a recovery is still a few quarters off. This may be great long-term, but it's painful right now.
