What: Shares of Sunrun Inc. (RUN 6.90%) fell as much as 18% today as a top competitor reported weaker-than-expected results.
So what: SolarCity's (SCTY.DL) fourth-quarter earnings report was what sank Sunrun today, and it brought up a lot of questions going forward. The company couldn't hit its own growth targets, and after losing Nevada as a market late in the fourth quarter, it predicted very weak 18% installation growth in the first quarter of 2016.
Sunrun will report earnings sometime late this month or early next month, and the questions are already swirling about what it will say. Nevada pulled a fast one on the solar industry by changing the rules of net metering for 2016 and there are now reports out that Massachusetts has hit its own net metering cap. This throws two of Sunrun's key markets into turmoil just as competitor SolarCity is slowing down.
Now what: The uncertainty in solar is too much for Sunrun investors today, and I'm not sure there will be much clarity in coming quarters. Utilities and state regulators are putting new rules in place that will slow the pace of solar growth, which is a concern for Sunrun. Long term, the company may be in a more stable position, but the uncertainty in the meantime is causing a massive sell-off. It's not one I would buy until we know exactly how bad conditions are going to get in 2016.
