SunPower $400M Offering: Credit Crunch Hits Solar Again

SunPower (SPWRA), one of the solar industry's darlings (at least back in 2007-2008), announced today that they will be raising $400M in stock and convertible debt offerings. SunPower says (as many other capital-strained companies claim as they attempt to raise capital in a tight credit market) that long-term prospects for solar are still bright, and that they will use the money raised towards capital spending even after swinging to a loss in 1Q09 and as solar power seems to be heading towards an over-supply on economic woes and government subsidy cuts.




Shares are down 4% about 2 hours after market close today; with 84M shares outstanding currently and the sale of 9M shares and $175M in convertibles, investors appear positive about the boost to SPWRA's balance sheet and less concerned with the equity dilution, which is partially priced in to the stock's poor performance in 2009.

Though it is clear that a return to profitability for SPWRA is rough and, for the next few quarters, improbable, this may be a good opportunity for long-term investors to enter a position in SPWRA. SunPower's valuation is more attractive relative to First Solar (FSLR) right now, has a balance sheet that can withstand the current macroeconomic environment for some time, and is highly differentiated in its product offerings. High-growth stocks tend to lead equity recovery cycles by a formidable time length, and SPWRA will likely gain investor confidence via this round of capital injection. If you are a patient, disciplined investor, this is a golden opportunity to add some sunshine to your portfolio (and potentially to your returns!)*

(SunPower Corporation is a vertically integrated solar products and services company that designs, manufactures and markets high-performance solar electric power technologies.)

*Disclosure: I do not own shares of SPWRA.