SunPower shares (SPWR) nosedived over 30% at the time of writing after the solar company announced it is halting some operations. This includes pausing lease and power purchase agreements on its sales platform and stopping new product shipments. In an online communication that was seen by Reuters and verified by the company, SunPower stated it would stop signing new agreements and wouldn’t be able to support installations for shipments in transit or already delivered.
SunPower said it’s focused on improving its financial situation as the industry faces rising inventory levels due to a weak rooftop solar market. California’s metering reforms have further hurt demand by lowering the tariff residential customers receive from the grid.
Today’s troubles come after a recent plunge in June that saw shares fall over 20%, which happened as a result of SunPower’s auditor, Ernst & Young, quitting. Other issues faced by SunPower include a subpoena from the SEC regarding accounting practices in February and a restructuring plan to cut costs in April.
Is SunPower Undervalued?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on SPWR stock based on five Holds and four Sells assigned in the past three months, as indicated by the graphic below. After an 85% decline in its share price over the past year, the average SPWR price target of $3.01 per share implies 76.02% upside potential.
According to the bearish analysts, the company’s issue of an additional 33.4 million warrants is anticipated to further dilute shareholders. They are also not fans of the company’s financial health issues, as GLJ Research’s forensic accounting team believes the financial circumstances at SunPower are dire.
