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Why Sunrun's Shares Plunged 9.9% on Monday

What happened

Shares of residential solar installer Sunrun (NASDAQ: RUN) plunged as much as 9.9% in trading on Monday after the company announced preliminary fourth-quarter 2020 results. Shares closed near their lows for the day, down 9%.

So what

Management said that the company deployed 171.6 megawatts during the fourth quarter, up 10% from a year ago. Net earning assets, a measure of the present value of projects, were $2.9 billion.

Image source: Getty Images.

Results may not be surprising and some growth is good considering the pandemic, but Sunrun's stock is up 367% over the past year, so investors were likely expecting a lot more. When final earnings numbers are released, it'll be important for investors to understand what the growth prospects of Sunrun look like this year and beyond.

Now what

It looks right now like the market may have gotten a little ahead of itself. Solar energy stocks have surged over the last six months as investors have bet that a new administration and falling costs would combine to drive growth and margin expansion in the industry. That narrative may take time to play out, and traders may be underwhelmed by the performance of companies like Sunrun in the short term. This is still an industry with tailwinds, but for now, volatility is the name of the game for solar stocks.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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