2023-03-10 16:18:42 ET
Sunrun ( NASDAQ: RUN ) settled -12.3% to a five-month low in Friday's trading after tech lender SVB Financial was shut down by U.S. regulators , and the solar company's connection to the bank hurt the stock , says Avi Salzman at Barron's .
The bank - which promotes its relationship with Sunrun on its website - lent the company money in 2014 before it went public, and was one of the lead banks arranging a $575M million loan for Sunrun in January expected to finance solar panels installed on homes.
Sunrun ( RUN ) depends on outside lenders to finance its projects, because it pays for the equipment that gets installed on clients' roofs in advance, and "the potential risk here is Sunrun loses some of its credit facility funding ability," said analyst Gordon Johnson, a skeptic of the company's business model.
SVB Financial has been involved in lending to several renewable energy companies, not just Sunrun ( RUN ), Raymond James analyst Pavel Molchanov told Barron's , adding that if the bank is forced to slow its lending, others likely would step in.
"Banks love lending to these kinds of businesses because of the generally low risk involved, and also because it improves their ESG scores," Molchanov said. "So, if one lender exits the market, there is plenty of capacity elsewhere."
Sunrun's ( RUN ) woes appeared to weigh on some other solar stocks, including SunPower ( SPWR ) -5% and Sunnova Energy ( NYSE: NOVA ) -6.4% , which called its exposure to SVB Financial " immaterial ."
In a statement near the close, Sunrun ( RUN ) said SVB Financial represents a small percentage of its overall credit facilities.
"SVB is a lender in Sunrun's parent $600M recourse credit facility which includes letters of credit along with the company's $1.8B non-recourse senior aggregation warehouse facility. Both facilities have a diverse group of banks involved. The recourse credit facility has 13 lenders and the non-recourse senior aggregation warehouse facility has 9 lenders... The $1.8B non-recourse senior aggregation warehouse facility currently has ~$710M undrawn, subject to additional asset contributions increasing the borrowing base, of which SVB's undrawn commitment was ~$40M."
Sunrun ( RUN ) reported it deployed a record 275.4 MW of panels in its Q4 .
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Why did Sunrun stock plunge? Exposure to SVB bank sparks funding concerns