SunPower Corp. stock downgraded on meme trade concerns

SunPower Corporation (SPWR) stock has been downgraded by Wolfe Research to Underperform from Peer Perform. The firm initiated this downgrade due to SunPower's being an "extreme" example of a stock benefiting from the resurgence of the meme trade.

Yahoo Finance's Seana Smith and Madison Mills break down the details.

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This post was written by Angel Smith

Video Transcript

Research, downgrading some power to under perform.

And that's down from the previous rating, which was that pure perform the stock down over 29% here now Wolf research saying that this stock is the most extreme example of the meme stock resurgence and sea, and we know this is a heavily shorted stock.

I was just taking a look at some of the data here.

Short interest on this name climbed 96% on Tuesday, but the rally in some power allowed this name to erase all of the 2024 losses.

And this comes as the entire equipment solar equipment, stocks space is struggling with higher for longer interest rates, with the fact that individuals who were going to switch to solar power largely did it during the course of staying at home for a couple of years during the COVID-19 pandemic.

And it's got a lot more expensive to do it with those higher interest rates.

So it's interesting to see the stock continue to be a mean name.

Yeah, it is, and I think that this just highlights what has been going on in the market the last some of these names not trading within their fundamentals.

We're certainly seeing that.

And that's essentially what this analyst is calling out in this downgrade here.

That he does have on this name basically saying that right now he's downgrading the recommendation to underperform because it needs to come back to reality.

Once a squeeze which we have been seeing play out on the markets over the next two days, uh, starts to subside a little bit.

He talked about some of the headwinds or some of the challenges that are ahead here for the industry, specifically for some power.

What I found was pretty interesting.

Here within this note was the he called out the outlook for rooftop solar in California specifically, and why he mentioned, This is such a head one for some, power versus some of his rivals are more of a challenge.

I should say, for some power versus some of his rivals is because of their exposure to California.

They have a greater exposure to California and then some of the sons than some of their other peers out there, so that could put them at some risk here, at least in the short term.

So you mentioned higher rate you mentioned the uncertainty surrounding the sector as a whole.

And obviously this downgrade comes on the heels of what has been pretty astonishing rally for this name and many names over the last two days.

You're talking about a gain of more than 90% you said in one trading day.

More than 9% in two trading days is so.

It's no surprise that there's analysts out there saying that, Hey, this does not make a heck of a lot of sense and we gotta see this return to reality at some point.

Real.

Where is the reality shot up?

It's still, I guess it's coming in for the A. MC is it's starting to come in for GME as well, but it's just fascinating that we're still seeing the retail investors pushing up these meme names here.