SunPower's stock skyrockets despite company's challenges: 'Shorts dug themselves a hole here'

By James Rogers

SunPower shares register their largest percentage increase since May 14

SunPower shares climbed 31.3% on Tuesday despite the challenges facing the maker of solar-energy technology.

The company's shares fell 74.75% last week, making it the stock's worst week on record, according to Dow Jones Market Data. But Tuesday, the stock registered its largest percentage increase since May 14, when it rose 59.6%.

SunPower (SPWR) trades were attracting plenty of attention on social media Tuesday. "Shorts dug themselves a hole here," wrote a user on X who goes by @boogeymantradez.

Related: SunPower's stock just had its worst week on record, and this analyst sees more pain ahead

"The company is trading like it's going into bankruptcy," wrote another user, who goes by @JamesMclaire on X. "But, there are some lucrative trades to be made for now ... if you have the balls to execute."

On Monday, Mizuho Securities downgraded SunPower shares to underperform and cut its price target, citing the company's decision to change customer-financing options, as well as balance-sheet constraints.

Also Monday, Susquehanna said it was suspending its SunPower rating and price target following the company's letter to dealers last week stating it will no longer support lease and PPA sales. "Going forward, our prior estimates, price target and recommendations should no longer be relied upon," Susquehanna analyst Biju Perincheril wrote. Susquehanna previously had a neutral rating and price target of 68 cents for SunPower.

With a power purchase agreement, or PPA, customers agree to purchase the electricity generated by a solar system installed at their home instead of paying to rent the system.

Related: Shares of Faraday Future, SunPower, MicroCloud Hologram and other memes surge, lifted by another meme-stock revival

Last month, SunPower was one of several heavily shorted stocks lifted by the meme-stock revival sparked by the return to social media of influential trader Keith Gill, also known as Roaring Kitty.

Solar stocks fell last week after Republican presidential nominee Donald Trump vowed to use fossil-fuel production to lower taxes and stop inflation during his speech at the Republican National Convention in Milwaukee.

However, shares of renewable-energy specialists First Solar Inc. (FSLR), AES Corp. (AES) and NRG Energy Inc. (NRG) are up this week, after President Joe Biden dropped out of the presidential race Sunday and endorsed Vice President Kamala Harris as the Democratic nominee. A potential Harris administration is expected to defend economic policies instituted by Biden, such as the Inflation Reduction Act's subsidies for electric cars and green-energy projects.

Chris Matthews contributed.

-James Rogers

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07-23-24 1741ET

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