California-based solar solution company SunPower (NASDAQ:SPWR) is in the midst of a brutal pullback. SPWR stock closed down nearly 17% today, hitting a 52-week low of $15.70 per share.
What’s casting a shadow over SunPower today?
Today, SunPower announced its preliminary fourth-quarter results. Leading the report was a disclosure that the company found a cracking issue in some of its third-party connectors. As such, the company expects to pay nearly $31 million in replacement costs. This is what many consider the main detriment pushing SPWR down today.
In reference to the product quality assessment, SunPower commented on the implications related to the connectors.
“There have been no reported safety incidents attributed to this issue, nor has there been any degradation of performance. Nevertheless, to avoid potential longer-term complications and ensure an excellent lifetime customer experience, SunPower is proactively replacing all of these connectors. The company plans to replace the connectors in impacted equipment largely during 2022. Based on SunPower’s testing, the company expects systems to continue to operate safely while awaiting replacement.”
That isn’t the only news bringing down SPWR today, however.
Investors Express Doubt in SPWR Stock
In addition to the cracking announcement, SunPower reported pertinent information regarding its financial health. The company predicts its fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) will be on the low end of its $18 million to $41 million range. Why? The company said that $6.5 million from Q4 would be pushed into 2022. Another $3 million is going toward sales and marketing.
Despite the poor reaction to the disclosure, the company did report several silver linings for investors. Particularly, its residential growth saw a 33% increase in Q4, leading to its largest-ever sales backlog heading into 2022.
SunPower plans to announce its full Q4 financial results on Feb. 16. Until then, however, it seems SPWR investors will have to hold their ground amid an unfortunate drop.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.