SHLS - Shoals Technologies: Market And Warranty Update

2024-05-22 11:03:57 ET

Summary

• Shoals has been growing rapidly but is currently experiencing a slowdown as solar developers run into delays, causing revenue to slip into later quarters.
• Work on the wire shrinkback warranty continues, and it appears the extent of the problem has been identified.
• Shoals is facing a shareholder class action lawsuit for failing to properly disclose the full extent of the warranty liability when they initially announced there were problems.
• Shoals stock is the cheapest it has ever been and has maintained profitability despite customer delays and warranty costs.

Investment Thesis

Shoals Technologies ( SHLS ) is a growing electrical balance of systems (EBOS) provider. EBOS encompasses the electrical components between solar panels, inverters, and batteries. 58% of all new electrical generation capacity is expected to come from solar in 2024. Electricity demand has been stagnant since 2007 , but that is poised to change due to a combination of data center growth and more domestic manufacturing, while rising EV adoption will also spur future growth....

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