Elementary, My Dear Watson, Sunrun Faces a Solar Eclipse!

The Curious Case of the Cratering Solar Stock

The game you see is afoot! Or rather afoot was the price of Sunrun shares after a rather precipitous plunge enough to make even the most seasoned investor clutch their pearls. RBC Capital Markets in their infinite wisdom (or perhaps belated observation) has downgraded the stock muttering something about 'sector perform' and a price target that suggests further descent. It appears the sun metaphorically speaking is setting on Sunrun's prospects at least according to these financial stargazers.

A Senate Bill and Shadows of Doubt

Ah politics! The art of making the probable impossible and the possible improbable as someone once wisely remarked. The U.S. Senate's reconciliation bill that grand tapestry of financial tinkering has cast a long shadow over the solar industry. The possible elimination of tax credits for residential solar leasing has left investors in a state of considerable agitation. One might say the wind has been knocked out of their sails...or solar panels.

Seventy Percent Solution... or a Partial Remedy?

Dendrinos bless his analytical heart points out that a significant portion of Sunrun's customer base is nestled in energy storage. These it seems may be spared the full brunt of the tax credit guillotine. However this is a scant consolation a mere flicker of light in an otherwise darkening room. As I always say Watson 'Data! Data! Data! I can't make bricks without clay!' And the data here paints a rather bleak picture of profitability.

The Elusive Quest for Positive Cash Generation

Elementary my dear readers! The crux of the matter lies in cold hard cash. Dendrinos opines with a rather pessimistic air that achieving positive cash generation is akin to finding a needle in a haystack especially given the industry's current cost structure. It would seem that residential solar costs would need to be significantly lower to entice customers. A noble aspiration perhaps but one that appears dare I say unlikely.

Austerity Measures and Market Positioning

In the grand tradition of financial prudence (or perhaps desperation) austerity measures are deemed necessary. Sunrun's scale and market positioning are seen as advantages a silver lining in a rather cloudy sky. However the path back to positive cash flow is a long and winding one fraught with uncertainty. As I often tell Watson 'When you have eliminated the impossible whatever remains however improbable must be the truth.' And the truth here is shrouded in doubt.

The Downward Spiral Continues

The stock alas continues its downward trajectory marking what appears to be its fifth consecutive year of decline. It seems the financial Grimpen Mire is claiming another victim. One is left to wonder as I often do if there is a solution to this perplexing puzzle. But alas for now the only certainty is uncertainty. 'The world is full of obvious things which nobody by any chance ever observes.' Perhaps with a bit more observation we can unravel this enigma. But for now it seems the sun has indeed set on Sunrun's immediate fortunes.