Insights

Why Solar Energy Stocks Got Crushed Today

What happened 
Solar energy stocks got crushed again on Monday as the market sold off. The S&P 500 ended the session down 3.2%, while the Nasdaq Composite fell 4.3%. But solar stocks magnified those losses. 
At their lows for the day, SolarEdge Technologies (NASDAQ: SEDG) was off by 12.2%, Sunrun (NASDAQ: RUN) was down 11.6%, and SunPower  (NASDAQ: SPWR) was down 10.5%. They ended Monday’s session down 10.5%, 9.9%, and 9.4%, respectively. 
Image source: Getty Images.

So what 
Not only was the stock market down, but West Texas Intermediate crude oil fell 6.8% Monday. In the short term, solar stocks often rise and fall along with the price of oil and that was a big dip. As the theory goes, lower oil prices make it less cost effective to switch to solar, while higher oil makes solar an even better deal. That’s not really what we see in the solar industry, which rarely competes head to head with oil and has become more competitive on a price basis with fossil fuels generally for more than two decades. But that’s nonetheless how traders respond. 
One palpable threat to the growth of the solar industry is rising interest rates. Because a solar installation’s long-term energy production is less valuable in today’s dollars when interest rates are higher, rising rates can have the effect of making solar energy less competitive. But interest rates for bonds were actually down slightly Monday and in the U.S., the yield on the 10-year Treasury dipped to 3.06%.
As negative as the market’s sentiment is, the first-quarter earnings reports these companies released last week showed a lot of progress. Their revenues rose and SunPower and SolarEdge reported net income, while Sunrun said it added $483 million in gross earning assets in the quarter. Operationally, they are doing well, even if there are some headwinds coming their way. 
Now what 
Sometimes it’s important to take a step back and look at a company or industry from a “big picture” perspective. We know that solar energy is gaining market share, and that residential solar is a particular growth area. But the market is volatile, and stock gains don’t come evenly. Over the last three years, each of these stocks has been profitable for shareholders, but the rides have been rocky. 

SEDG data by YCharts
Long term, I think these companies are still strongly positioned to grow and increase their profitability, but that doesn’t mean volatility will stop. The energy markets can be a wild ride for investors, and right now, a broad sell-off is hitting the entire industry. But results are solid, and as long as that continues, the tailwinds will remain behind the solar industry and investors will do well over time. 
Travis Hoium has positions in SunPower. The Motley Fool recommends SolarEdge Technologies. The Motley Fool has a disclosure policy. –

What happened 

Solar energy stocks got crushed again on Monday as the market sold off. The S&P 500 ended the session down 3.2%, while the Nasdaq Composite fell 4.3%. But solar stocks magnified those losses. 

At their lows for the day, SolarEdge Technologies (NASDAQ: SEDG) was off by 12.2%, Sunrun (NASDAQ: RUN) was down 11.6%, and SunPower  (NASDAQ: SPWR) was down 10.5%. They ended Monday’s session down 10.5%, 9.9%, and 9.4%, respectively. 

Image source: Getty Images.

So what 

Not only was the stock market down, but West Texas Intermediate crude oil fell 6.8% Monday. In the short term, solar stocks often rise and fall along with the price of oil and that was a big dip. As the theory goes, lower oil prices make it less cost effective to switch to solar, while higher oil makes solar an even better deal. That’s not really what we see in the solar industry, which rarely competes head to head with oil and has become more competitive on a price basis with fossil fuels generally for more than two decades. But that’s nonetheless how traders respond. 

One palpable threat to the growth of the solar industry is rising interest rates. Because a solar installation’s long-term energy production is less valuable in today’s dollars when interest rates are higher, rising rates can have the effect of making solar energy less competitive. But interest rates for bonds were actually down slightly Monday and in the U.S., the yield on the 10-year Treasury dipped to 3.06%.

As negative as the market’s sentiment is, the first-quarter earnings reports these companies released last week showed a lot of progress. Their revenues rose and SunPower and SolarEdge reported net income, while Sunrun said it added $483 million in gross earning assets in the quarter. Operationally, they are doing well, even if there are some headwinds coming their way. 

Now what 

Sometimes it’s important to take a step back and look at a company or industry from a “big picture” perspective. We know that solar energy is gaining market share, and that residential solar is a particular growth area. But the market is volatile, and stock gains don’t come evenly. Over the last three years, each of these stocks has been profitable for shareholders, but the rides have been rocky. 

SEDG data by YCharts

Long term, I think these companies are still strongly positioned to grow and increase their profitability, but that doesn’t mean volatility will stop. The energy markets can be a wild ride for investors, and right now, a broad sell-off is hitting the entire industry. But results are solid, and as long as that continues, the tailwinds will remain behind the solar industry and investors will do well over time. 

Travis Hoium has positions in SunPower. The Motley Fool recommends SolarEdge Technologies. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!