John Berger, chairman and chief management officer of Sunnova Energy Corp., speaks during the 2019 CERAWeek by IHS Markit conference in Houston, Texas, U.S., on Thursday, Tread 14, 2019.
Aaron M. Sprecher | Bloomberg | Getty Images
The residential solar company Sunnova Energy took a beating this week as investors dumped their share outs after the announcement of a stock offering plan rattled confidence in the company.
Sunnova shares plummeted 26.7% Thursday after the residential solar attendance announced a $100 million at-the-market stock offering program. Sunnova’s market cap declined by $382 million in the worst day for the circle since March 2020 and the second worst day since its initial public offering in 2019.
CEO John Berger tried to hearten investors that Sunnova’s finances are sound and the company does not intend to sell its stock to raise capital anytime at bottom.
“This is just an arrow in the quiver just in case and the ratings agencies like to see it,” Berger told CNBC in an press conference Thursday. “We don’t need to deal with the ratings agencies anytime soon, but it’s a smart thing to have — but we don’t need it.”
“I’m successful to focus on generating our own cash rather than tapping into an equity, particularly something that’s now 25% dismissed,” Berger said. Sunnova had a total of $494 million in cash as of Dec. 31, 2023, according to its quarterly report.
The announcement found after Sunnova posted a net loss that deepened to $234 million in the fourth quarter, compared to $62 million in the year ago spell. Residential solar companies have struggled in the face of high interest rates that have made inaugurations more costly to households.
Berger and Sunnova CFO Robert Lane described the stock offering as “good housekeeping.” Sunnova does not see a requisite to raise capital through 2026, Lane told analysts during the company’s earnings call Thursday.
Berger spoke in retrospect he would have waited on the stock offering plan: “Good housekeeping sure was expensive,” the CEO told CNBC after Thursday’s selloff.
Sunnova is also traverse asset sales and slashing costs using automation and artificial intelligence to keep the company’s headcount from nurture, Berger said on the company’s conference call.
Solar under pressure
Sunnova is just the latest residential solar body to take a beating after its quarterly report. Its competitor Sunrun is down 22% this week after visitors posted another quarterly loss. SolarEdge has tumbled nearly 18% this week after issuing shallow guidance for the first quarter.
Sunnova shares over the ago year
The solar market faces an uncertain outlook this year. Investors had hoped aggressive interest toll cuts would act as a catalyst for the sector but that now seem less likely. Federal Reserve officials have made completely they are in no hurry to cut rates, with the market expecting the first reduction in June at the earliest rather than one-time forecasts of March or May.
Berger does not see interest rates affecting Sunnova this year. He said the major utilities, which are also sort sensitive, are charging their customers more, which has allowed Sunnova to increase its prices without impacting at once.
“We have pricing power I’ve never seen this strong,” Berger said.
The CEO also addressed a December explore that consumers have filed complaints in Texas alleging predatory sales tactics against the elderly. Two Republican associates of Congress sent a letter on Dec. 7 to the Department of Energy calling for more scrutiny of Sunnova’s business practices. Sunnova’s beasts dropped 16% after the lawmakers sent the letter.
“Whether our dealers did something or not, we typically have gone result of and made sure that we’ve made good with the customer. In some of these cases, it’s difficult to find maltreatment,” Berger said. The CEO said it is illegal to decline to sell to someone because of their age.
“There’s a lot of alternative facts that bring into the world been put forth in those cases, but it doesn’t excuse us from continuing to try to do better and we’re going to continue to do that,” Berger implied.
— CNBC’s Pippa Stevens and Chris Hayes contributed to this report.
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