Boy is it getting hot on Wall Street. Thursday morning is seeing Sunworks (NASDAQ:SUNW), another micro-cap solar company, simply surge. But what exactly has SUNW stock soaring nearly 300%?
The easy answer is that solar stocks are incredibly hot right now. Many investors are eyeing the space as consumers and governments increasingly adopt policies favoring alternate energy sources. A huge catalyst on the horizon is the November presidential election. If former Vice President Joe Biden ends up in the White House, solar stocks will have his backing. In fact, the Democratic nominee plans to invest as much as $2 trillion in clean energy projects.
But it seems that there is more to the major rally in Sunworks than just that. Would an upcoming election really be enough to send SUNW stock higher by 300%? Maybe not. It appears that there is a little bit of speculation happening thanks to the electric vehicle trend.
The first big reason for this speculation dates all the way back to early August. Sunworks announced that it had agreed to a merger with Peck Holdings (NASDAQ:PECK), another player in the solar construction space. According to the company press release, the merger would create a coast-to-coast leader in the solar industry and drive cost synergies.
To understand why a press release from Aug. 10 is likely sending SUNW rocketing on Thursday, you have to understand just how hot the electric vehicle trend is.
SUNW Stock Soars on EV Speculation
Yesterday we saw SPI Energy (NASDAQ:SPI) make similar moves in the market, after that solar company announced the launch of its electric vehicle subsidiary EdisonFuture. Investors were very excited to get in on a pure-play in the space and ride it up. This morning, many are betting that the pre-market moves in SUNW are the first steps of a similar rally.
Plus, it appears that the August news all ties into this speculation. Why? Many investors believe that the upcoming merger could create an opportunity for Sunworks to make a strategic pivot and lean into electric vehicles. If SPI Energy can do it, why not Sunworks and Peck Holdings? Wall Street is so ready for new opportunities in the electric car world that come with cheaper price tags than Tesla (NASDAQ:TSLA).
Be incredibly cautious with this news. There is no press release or any formal announcement of its EV plans. Rumors alone — and a lot of hope — are driving the action in Sunworks.
There is a lot of potential for risk here with Sunworks, especially due to its small size. However, if its merger with Peck Holdings does result in an electric vehicle pivot, keep a close eye on SUNW stock.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.
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