SunPower (NASDAQ:SPWR) stock is surging higher by about 50% today. Last week, SPWR stock plunged lower by around 75%, marking the solar company’s worst ever week. That came as the company announced that it would no longer provide solar panel leases to customers. In April, SunPower said that it would stop selling panels directly to customers.
As of June 30, there were 29.15 million shares of SPWR stock sold short, totaling $86.28 million. That’s equivalent to a short interest as a percentage of float of 54.60%, according to Fintel. The figure is extremely high, as any short interest above 20% is considered elevated.
However, investors shouldn’t expect today’s move to stick, as SunPower is facing a plethora of issues. Let’s get into the details.
SPWR Stock Surges 50% on High Short Interest
Last December, SunPower noted that it had substantial doubt about its ability to continue as a going concern due to violating a credit agreement. In February, the company stated that it would not be able to file its quarterly earnings on time, which led to a Nasdaq noncompliance notice. With shares hovering near the $1 level, SunPower could receive another noncompliance notice if its shares close below $1 for 30 consecutive business days.
Then, in April, SunPower’s Audit Committee concluded that its 2023 10-K and 2023 quarterly earnings should not be relied upon due to accounting errors.
On June 27, SunPower’s auditor, Ernest & Young (EY) informed the company that it would resign due to a loss of independence as a result of an acquisition. EY and SunPower previously had a disagreement regarding allegations of misconduct.
Wall Street seems to have lost faith in the company. Last week, Mizuho analyst Maheep Mandloi lowered his price target to 50 cents from $4 while dropping the rating to “underperform” from “neutral.”
“We downgrade SPWR to Underperform after news that the company is stopping lease and PPA installations, the most favored financing options in the industry, likely due to balance sheet constraints,” wrote Mandloi. He added that these constraints have increased due to the company’s delayed financial filings.
On the same day, Roth/MKM lowered its price target to $2.20 from $3.25 while Goldman Sachs lowered its target to 50 cents from $2 this morning.
On the date of publication, Eddie Pan 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
