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Why SunPower's Shares Plunged 10.4% on Monday

Travis Hoium, The Motley Fool

What happened 

Shares of SunPower (NASDAQ: SPWR) plunged as much as 10.4% in trading Monday as China's trade and currency disputes with the U.S. continued. The stock closed down 7.6% for the day. 

So what

Last week, President Trump imposed additional tariffs on Chinese imports, and over the weekend fears rose that the trade war would get worse. And China allowed the yuan to fall to a decade low, which makes products like solar panels from China cheaper in the U.S. 

Large solar farm in a field.

Image source: SunPower.

SunPower has a strange relationship with China because it's competing against commodity solar manufacturers that will benefit from a cheaper yuan, but it's also producing products in China. The P-Series product that assembles commodity solar cells into a solar panel that's slightly more efficient than competitors' offerings is primarily produced in China, and this could make that product cheaper to sell to the rest of the world. 

Now what

The entire market fell today and solar stocks dropped because investors fear Chinese competition for U.S. companies. But I don't think this fundamentally changes anything for SunPower, and in some ways could make its P-Series product more competitive around the world. This isn't a reason to sell, and after a solid earnings report this could be a good buying opportunity for long-term investors. 

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

This article was originally published on Fool.com