Why SunPower's Shares Popped 11% Today

What happened 

Shares of solar-manufacturer SunPower Corporation (NASDAQ:SPWR) jumped as much as 10.9% in trading Thursday after reporting fourth-quarter 2018 results. Shares settled slightly as the day went on but were still up 6.1% at 3:35 p.m. EST.

So what

SunPower’s quarterly revenue fell 29.8%, to $456.8 million, and net loss was $158.2 million, or $1.12 per share. On a non-GAAP basis, revenue was $525.4 million and net loss was $30.3 million, or $0.21 per share.

Revenue will fluctuate quarter to quarter, so I wouldn’t lose sleep over the decline, but investors are looking at the loss of $0.21 easily beating the $0.38 loss Wall Street expected as a bullish sign for the company. 

A home with solar panels as the sun beats down.

Image source: Getty Images.

What really caught the eye of investors was management saying they were looking for strategic-partner funding to expand Maxeon Gen 5 technology in Asia and/or P-Series manufacturing in the U.S. This could expand capacity, lower costs, and ease pressure on a balance sheet that’s already seen net debt fall from $1.17 billion a year ago to $589.6 million at the end of 2018.

Now what

SunPower is addressing its two biggest problems in this earnings report, which are debt and scale. Debt has come down dramatically as the company has sold off assets, and the announcement that the company is looking for manufacturing partners could help it increase scale.

If both happen and the company can slowly expand gross margins, SunPower could be highly profitable. That’s what investors are betting on today, but it’s a long road ahead to get there. 

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