What a brutal day it is for solar stocks and especially Sunrun (NASDAQ:RUN). RUN stock is down about 7% on Wednesday, following some disparaging comments from Muddy Waters Research.
The decline comes after Muddy Waters’ Carson Block published some negative commentary on the company. He explained that Sunrun has “an uneconomic business built on three shaky pillars.”
That’s never what investors want to hear — especially if the research is from a notorious short-selling firm. Notably though, Muddy Waters has had some pretty accurate calls in the past.
RUN stock is getting smoked on the day, but it’s not the only solar stock that’s down. In fact, it’s not even taking the brunt of the rout. That would be Enphase Energy (NASDAQ:ENPH), which is down over 9%.
Further, First Solar (NASDAQ:FSLR) is getting hit too. Despite hitting new highs on the year yesterday, shares are down about 5% so far in the session. It’s safe to say that today isn’t a good day for solar stocks.
Is RUN Stock Done For?
While RUN stock is getting pounded, it’s not like it’s the only solar stock down on the day. Although the comments from Muddy Waters don’t help bulls’ case.
Block went on to say that Sunrun is “an uneconomic business built on three shaky pillars: the equity story of exaggerated ‘Subscriber Values’ and ‘Gross/Net Earning Assets,’ funding growth through abusing tax incentives, and issuing ABS that could be exposed to a RUN bankruptcy.”
Along with Hannon Armstrong (NYSE:HASI), he called them “non-economic BS artists.”
Muddy Waters was actually bearish on Sunrun earlier this summer, publishing a short report on Aug. 3. However, investors seemed to ignore this, as solar stocks promptly exploded higher, helped along by strong solar earnings and the Inflation Reduction Act, which includes a provision for solar stocks.
In an update, he says RUN stock investors will be in for “nasty surprises,” although the company has pushed back on the claims.
Sunrun CEO Mary Powell said, “Our detailed response shines a light on the inaccuracies in their critiques.”
On the date of publication, Bret Kenwell did not have (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.
