Shares of solar manufacturer SunPower (NASDAQ: SPWR) jumped a whopping 115.1% in the first half of 2019, according to data provided by S&P Global Market Intelligence, as operations and the solar industry overall began to improve.
First-quarter results did little to instill confidence among investors, with an $89.7 million loss and a non-GAAP gross margin of just 6%. But there were signs of improvement, like the launch of the A-Series solar panel that's built on lower-cost next-generation technology and the sale of residential and commercial solar project portfolios. In the first two quarters, management expects to break even based on adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). By the fourth quarter, they expect about $80 million in EBITDA, driven by scale, technology improvements, and operational optimizations.
Image source: SunPower.
At a more broad level, news in the solar industry got a lot better. The Solar Market Insight Report 2019 Q2 from the Solar Energy Industries Association (SEIA) and Wood Mackenzie Power & Renewables showed record first-quarter installations of 2,674 megawatts (MW), up 10% from a year ago. 2019 is expected to see around 13,000 MW of solar installed, up 25% from a year ago, a much stronger-than-expected showing.
SunPower has been struggling with declining solar panel prices and costs that are higher than those of many commodity competitors. But 2019 may reverse both of those trends, with panel prices potentially rising thanks to demand increases and costs coming down as new technology is rolled out and scale broadens. If that leads to higher margins, it could mean continued success for the stock. Given how far it's already run, investors are pricing a lot of improvement in for SunPower in the back half of 2019.
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