2024-03-13 02:04:00 ET
Sunrun (NASDAQ: RUN) stock price continued its downward trend this week as concerns about the solar energy industry remained. It has collapsed to a low of $10.6, its lowest level since November 14th. This drop has pushed its market cap from a record high of $19.05 billion to about $2.6 billion.
Solar energy concerns remain
Sunrun share price has been in a strong bearish trend for a long time. The stock has moved from an all-time high of $101 in 2021 to about $10. This decline happened amid rising concerns about the solar energy industry in a high-interest-rate environment.
The other big concern is that China has grown its muscle in the solar energy industry in the past few decades. Today, China is the biggest manufacturer of solar panels. It has hundreds of manufacturers, who have helped lower the prices of solar panels.
The US and other Western countries have turned to incentives to boost domestic manufacturing. Biden has announced billions of dollars in funding through the Inflation Reduction Act (ACT).
The challenge that many US companies are facing is that Chinese companies are investing in the country to take advantage of these incentives . Also, according to Bloomberg, these incentives will not be enough to fend off cheap Chinese imports. The report said :
“Global price pressures, and especially cheaper and cheaper imports, will result in many U.S. factories facing a pretty rude awakening, [which] will probably lead to a lot of factory cancellations.”
The most recent results showed that Sunrun’s business was struggling. Its total revenue came in at $516.6 million, a 15% decline from the same period in 2022. Most of this decline was because of its solar energy systems business whose revenue fell by 47%.
This decline was offset by its customer agreements and incentives revenue, whose revenue soared by 33% to $321 million. It also added 30k subscribers to over 933k.
Sunrun understands the challenges that the industry is facing. In line with this, the management has moved to a storage-first model, which it hopes will improve its margins in the long term. The company’s fleet has a capacity of 1.3 gigawatt-hours capacity and nearly 7 gigawatts of solar capacity.
A shift to a storage-first approach is better because it has numerous tailwinds as the price of solar panels and other equipment is falling. Capital costs are expected to continue falling while demand for clean energy is still rising.
The company also has a solid balance sheet. It ended the year with $680 million in unrestricted cash and is expected to end 2024 with more money as it boosts its cash flow. This is notable since the company has no meaningful maturities this year. It also extended its 2025 maturities from January to November.
Sunrun stock price forecast
The daily chart shows that the Sunrun share price has been in a strong bearish trend in the past few months. It has remained below the descending trendline, which connects the highest point since September 2022.
The stock has plunged below the 50-day Exponential Moving Average (EMA). Also, the MACD and the Relative Strength Index (RSI) has drifted downwards. It is also moving a few points above the key support at $8.45, its lowest point in October.
Therefore, the outlook for the RUN stock price is extremely bearish, with the next point to watch being at $8.
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