SunPower’s inventory tanks after going-concern warning

The inventory is down 77% this 12 months, heading for what’s shaping as much as be its worst yearly efficiency since 2016, when it fell 78%. The losses distinction with positive factors of about 23% for the S&P 500 index
SPX
and a decline of round 30% for the Invesco Solar exchange-traded fund
TAN
in the identical interval.

In filings earlier Monday, SunPower disclosed a breach of covenant as a result of a delay in submitting its 10-Q. As a consequence, the corporate’s third-quarter submitting included going-concern language, warning traders {that a} failure to achieve an settlement with lenders would lead to quick debt reimbursement of $65.3 million.

“Ultimately while [SunPower] continues to work with creditors to reach agreements on multiple covenant breaches, we see the heightened credit risk [and] potential for dilution continuing to weigh on shares,” Truist analyst Jordan Levy mentioned in a be aware to purchasers Monday.

SunPower ended its third quarter with about $116 million in money and equivalents.

In the filings Monday, SunPower mentioned it’s searching for extra waivers and evaluating varied funding alternate options that might embrace an fairness increase or preparations with strategic companions.

“As we’ve previously noted, we see further near-term headwinds to cash flows,” particularly as the corporate’s stock is anticipated to rise within the present quarter, Levy mentioned.

Besides its personal troubles, SunPower and different solar-power shares have been below stress from increased rates of interest and regulatory adjustments in states akin to California, which elevated payoff occasions for residential solar energy.

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SunPower final month reported third-quarter gross sales that had been under Wall Street expectations and swung to a quarterly loss.