Please ensure Javascript is enabled for purposes of website accessibility

Why Vivint Solar Inc's Shares Popped 26% in April

By Travis Hoium - May 7, 2016 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An industry bankruptcy caused this solar stock to pop, but there are still challenges long term.

Image source: Vivint Solar.

What: Shares of residential solar installer Vivint Solar Inc (VSLR) jumped 26% in April after its former acquirer filed for bankruptcy.

So what: The big news in solar last month was SunEdison's official bankruptcy. The company has been in trouble for a long time, and Vivint Solar had broken off its proposed acquisition of the company and sued SunEdison, but there was still some relief when the bankruptcy finally took place.

More consequential was probably the surprise resignation of CEO Greg Butterfield early in May. I'm not sure why Butterfield would jump ship unless operating conditions weren't getting better for the company after the SunEdison fiasco. We'll see where Vivint Solar stands when it reports first-quarter earnings, but investors should start to question its ability to finance projects long term.  

Now what: I'd like to see upside in Vivint Solar, but there's just too much risk to ignore. The company has to keep costs down to compete, line up a continual line of financing to fund projects, and contend with customers increasingly choosing loans over its preferred lease model. That's not a strong position to be in, especially when you're not the leader in any of those categories.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vivint Solar, Inc. Stock Quote
Vivint Solar, Inc.
VSLR

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.