Sunrun: The Stock Can Triple Or Go To Zero, But Risks Tilted To The Downside

  • Sunrun has experienced a significant deterioration in many KPIs, including negative growth in customer additions and a 1% growth in solar energy capacity installed from last quarter.
  • Due to a sharp slowdown in solar demand, the company is facing a persistent growth decline in its total revenue going into FY2024, coupled with negative EBIT and FCF.
  • With $9.5 billion in net debt on its balance sheet and an interest expense accounting for 30% of total revenue in 3Q FY2023, the company is exposed to solvency risk.
  • Despite a 60% YTD selloff, the stock’s valuation remains expensive, trading at a premium multiple of 5.72x EV/Sales TTM, compared to its peers.

What Happened

Sunrun (NASDAQ:RUN) has been underperforming in recent months, with a 60% YTD selloff compared to the iShares Global Clean Energy ETF (ICLN), which saw a 34% decline. Back in April, anticipating a potential growth slowdown due to