What Factors Have Driven Downstream Solar Stocks So Far in 2016?



Important factors

Uncertainty surrounding the Federal Reserve’s rate hike and changes in net energy metering regulations were the main factors that impacted downstream solar stocks in 1Q16. Also, tumbling commodity prices had an indirect impact during the first half of the quarter.

For instance, grandfathered net energy metering in Nevada led to the market exit of downstream solar companies such as Vivint Solar, Sunrun, and SolarCity. This resulted in lower bookings and impacted their bottom lines.

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Stock performance

Downstream solar stocks reached new highs in 4Q15 because of the ITC (investment tax credit) extension beyond 2016 in December 2015. However, the same momentum did not continue in 1Q16 due to the above-mentioned factors, driving the stocks lower.

Of all the downstream solar (TAN) stocks, Vivint Solar (VSLR) fell the most. The failed acquisition deal with SunEdison (SUNEQ) led Vivint Solar stock to tumble by nearly 77% since January 4, 2016. SunEdison filed for Chapter 11 bankruptcy on April 21, 2016.

The SolarCity (SCTY) stock lost nearly 62%, whereas SunPower (SPWR) and Sunrun (RUN) stocks lost about 46%. The Guggenheim Solar ETF (TAN), which tracks the broad-based solar market, lost about 31% during the same period.

Series overview

In this series, we will perform a comparative analysis of downstream solar companies’ 1Q16 earnings and SunPower’s downstream operations. Also, we will take a close look at its management’s guidance and analyst expectations for 2016. We’ll conclude the series with an outlook for the downstream solar industry.

In the next part of this series, we’ll compare the MW (or megawatt) deployed growth rate of major downstream solar companies in 1Q16.


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