The bankruptcy of solar giant SunPower Corporation (NASDAQ:SPWR) may be a good thing for a solar industry that has faced headwinds such as higher interest rates, inflation and tariff disputes with China, according to an investor.

“The industry will be a bit healthier by weeding out the weaker players like SunPower,” Rob Uek, co-CEO and senior portfolio manager focused on clean energy and tech for Essex Investment.

“SunPower had been ceding market share over the past number of years, so it isn't the biggest installer anymore, but the market share they did have will be picked up by the survivors,” he told Benzinga on Tuesday.

“It is sad to see the company file for bankruptcy, but it is also not surprising as there have been a number of red flags over the past few years: continued losses, accounting misstatements, concerns about its ability to continue as a going concern, resignation of its auditor, resignation of its CEO and finally, suspension of financing leases.”

SunPower agreed to sell assets including its BlueRaven Solar installation unit and new homes businesses to Complete Solaria Inc. (NASDAQ:CSLRW) as a stalking horse buyer for $45 million, Bloomberg reported. It asked the court to approve the deal by the end of September.

SunPower has about $2 billion in long-term debt and has been struggling since October to avoid potential defaults under various financing arrangements, the company said.

“We are starting to feel a bit better about the solar industry given that a number of these macro headwinds are abating and most of the concerns are more than priced into the stocks of many of the industry players,” Uek said.

SunPower’s Chapter 11 bankruptcy, which was filed in court on Monday, should not be viewed as a negative reflection on the solar industry, Guggenheim Securities analyst Joe Osha said.

“We want to be clear — the vast majority of SPWR's difficulties are specific to the company,” he wrote in a note on Tuesday.

“If anything, the disappearance of a large firm could provide opportunities for competitors.”

SolarEdge Technologies, Inc. (NASDAQ:SEDG) plans to report second-quarter earnings on Wednesday.

SPWR Price Action: SunPower dropped 44.79% to close at 35 cents on Tuesday.

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Photo: Leopictures from Pixabay

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Tuesday, August 06, 2024

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