Why Sunrun Stock (RUN) Is Trading Lower

Sunrun Inc RUN shares are trading lower by 7.6% to $8.97 Friday morning. Shares of solar stocks are trading lower in sympathy with Enphase Energy, which fell after issuing weak fourth-quarter guidance.

What Happened With ENPH?

Enphase's third-quarter earnings fell short of expectations, with earnings per share at $1.02 (versus an estimated $1.03) and revenue totaling $551.1 million (below the $566.02 million estimate).

The company attributed this underperformance to excessive inventory levels at distribution partners and decreased demand in significant European markets, including the Netherlands, France and Germany.

Enphase anticipates fourth-quarter revenue to be in the range of $300 million to $350 million, significantly lower than the estimated $601.24 million.

See Also: Fed's Favorite Inflation Gauge Matches Forecasts

Why This Matters To Sunrun Investors

Sunrun is part of the solar energy sector, and when a prominent company like Enphase, which is also in the same industry, reports disappointing results and weak guidance, it can negatively affect market sentiment for the entire sector.

Investors often react to the performance of one company within the same industry, leading to a sympathy movement.

Enphase's weak guidance for the fourth quarter suggests a potential slowdown in the demand for solar energy products and services.

This can lead investors to reassess their growth expectations for companies in the same sector, including Sunrun, resulting in a downward pressure on its stock price.

According to data from Benzinga Pro, Sunrun Inc has a 52-week high of $33.33 and a 52-week low of $8.43.