Suddenly a major collapse occurred.
A bearish "surprise attack" on American new energy giants. On July 19th Eastern Time, American solar giant SunPower suddenly collapsed, with a drop of over 57% during trading and a cumulative drop of 75% this week. On the news front, a letter indicates that SunPower no longer supports the sale of new leasing and power purchase agreements, nor does it support the installation of new projects and has stopped shipping. After the exposure of this letter, Wall Street analysts generally believe that SunPower is on the brink of bankruptcy.
Sunpower is one of the largest photovoltaic companies in the United States, founded in 1985 with over 5000 employees. It was listed on NASDAQ in 2005 and is a photovoltaic company that develops, designs, produces, and sells efficient, high reliability solar cells, modules, and systems.
The SunPower crash may be a microcosm of the US photovoltaic market. Currently, the US photovoltaic industry is experiencing a wave of bankruptcies. According to data from Roth Capital Partners, over 100 household solar energy companies and distributors will go bankrupt in 2023, which is six times the total of the previous three years. And the agency expects that more than 100 household solar energy companies in the United States will face bankruptcy.
Sudden collapse
On July 19th Eastern Time, US solar giant SunPower (stock code: SPWR) suddenly collapsed, plummeting over 57% during trading. As of the close, the decline was still as high as 55.01%, and the cumulative decline this week has expanded to 75%. Its latest stock price hit a historic low of $0.68, officially sounding the "one dollar delisting warning".
Looking at the extended period, the collapse of Sunpower's stock price began in 2023, with a cumulative decline of 73.21% throughout the year; Since the beginning of this year, the decline in its stock price has further accelerated, with a cumulative decline of 86% so far this year.
On the news front, US investment bank Roth MKM recently revealed that a letter it obtained showed that SunPower told distributors on July 17 local time that the company no longer supports new leasing and power purchase agreement sales, nor does it support the installation of new projects and stops shipping.
SunPower stated in the letter that the company is no longer able to provide installation services for transported and delivered goods. "SunPower is aware of the 'seriousness' of this decision and is seeking alternative suppliers to transfer the sold projects
Bloomberg analyst Pol Lezkano said that this is actually saying 'the company can no longer continue to operate'.
After the exposure of this letter, Wall Street analysts generally believe that SunPower is on the brink of bankruptcy.
Among them, Guggenheim Securities urgently lowered SunPower's target price to $0. Analysts Joseph Osha and Hilary Cauley wrote in their latest report, "Actually, this marks the end of SunPower as a solar operator
Guggenheim analysts said that SunPower is likely to "enter into (bankruptcy) liquidation proceedings" and ultimately sell its remaining assets and delist its stocks. "Considering the accumulated debt of the company, we believe that SunPower's equity no longer has any value
Earlier this week, JPMorgan analysts also told clients that SunPower's suspension of operations is "indefinite". The bank explained that this decision was mainly due to the weakening of its cash flow and balance sheet.
Analysis suggests that there are two very important catalytic factors for the growth of rooftop solar business in the United States: low interest rates, which enable consumers to afford the cost of such installations, and state-level policies, where households installing equipment can receive generous rewards for selling excess solar power to the grid.
At present, the two catalytic factors mentioned above do not exist. Among them, the Federal Reserve has maintained ultra-high interest rates for a long time; California, the largest solar energy market in the United States and the headquarters of SunPower, has reduced the compensation for households and businesses for delivering excess solar power to the grid, causing a significant blow to the industry.
The fall of giants
It is worth mentioning that Sunpower is one of the largest photovoltaic companies in the United States, with over 5000 employees and offices in China, Switzerland, Germany, Italy, Spain, South Korea, the United States, Australia, the United Kingdom, Greece, Israel, and the Philippines.
According to public information, Sunpower Corporation was founded in 1985 and is headquartered in California, USA. It was listed on NASDAQ in 2005 and is a photovoltaic company that integrates the development, design, production, and sales of efficient and high reliability solar cells, modules, and systems. It mainly designs, manufactures, and provides high-performance solar systems worldwide, and provides one-stop services for residential, commercial, and utility scale power plant customers.
French energy giant Total Energy owns approximately 65% of Sunpower as its controlling shareholder.
In 2020, Sunpower made significant adjustments and restructuring by splitting its battery and component manufacturing business into Maxeon, a Singaporean company. As part of this transaction, TCL Zhonghuan invested $298 million to acquire a 29% stake in Maxeon.
Afterwards, Sunpower's business focus shifted to distributed generation, energy storage, and energy services in North America, and later sold its industrial and commercial photovoltaic division to Total Energy, focusing on the household photovoltaic market.
However, due to the high interest rate environment in the United States driving up installation costs and the adjustment of grid electricity pricing policies, market demand has been sluggish, and the company's net losses have expanded, resulting in a continuous decline in new customers. In the fiscal year 2023, SunPower suffered a net loss of $247 million.
At the same time, SunPower's financial situation is also deteriorating day by day. In terms of borrowing, in December last year, the company violated a credit agreement due to errors in the 2023 semi annual report and failure to re report in a timely manner, requiring early repayment of a large amount of loans.
The wave of bankruptcies
In fact, the SunPower crash may be a microcosm of the US photovoltaic market. Currently, the US photovoltaic industry is experiencing a wave of bankruptcies.
A few days ago, American photovoltaic manufacturer Toledo Solar announced that it will immediately terminate all research and development work and gradually cease operations, and the company is about to go bankrupt. Toledo Solar focuses on the household market and specializes in the cadmium telluride thin film solar cell technology route.
At the end of June this year, Titan Solar Power, one of the largest household photovoltaic manufacturers in the United States, announced a permanent closure.
In addition to the two companies mentioned above, several photovoltaic companies in the United States have gone bankrupt this year, including Infinity Energy, Solcius, and Kayo Energy.
According to data from Roth Capital Partners, over 100 household solar energy companies and distributors will go bankrupt in 2023 alone, which is six times the total of the previous three years. And the agency expects that more than 100 household solar energy companies in the United States will face bankruptcy.
According to data released by Roche Securities, the US photovoltaic market is gradually adjusting to the interest rate environment. With the combination of multiple factors, the installation of household photovoltaics in the US is expected to decline by 20% year-on-year in 2024.
Analysts point out that the Federal Reserve has kept interest rates high for a long time, leading to an increase in loan costs and weakening the attractiveness of photovoltaics as a cost saving investment, further resulting in a decrease in consumer demand for photovoltaic systems. On the other hand, photovoltaic contractors heavily rely on loans as operating capital, and interest rate hikes have led to increased costs, resulting in cash flow problems and a large number of photovoltaic companies going bankrupt.
In addition, policy changes are also one of the main reasons for the closure of a large number of US photovoltaic companies. Among them, the new photovoltaic policy NEM 3.0 in California has significantly reduced the compensation for local rooftop photovoltaic owners to connect their surplus electricity to the grid, extended the investment return period, and greatly reduced the attractiveness of photovoltaic installations. According to reports, the installation of household photovoltaics in California in the first quarter of 2024 has significantly decreased by nearly 40% compared to the same period in 2023.