SunPower Corp. (SPWR US), the renewable energy equipment maker of solar panels, could not have wished for 2016 to end soon enough. In terms of stock performance, the company’s shares lost over 75% of their value, revisiting a price point that has not been seen since 2012. Notably, long holders are not the only side putting selling pressure on the shares, as short positions have been steadily on the rise as well.
According to the S3 Short Interest projection, a measure of the real-time relative change in shorting activity, our model is showing as much as 21.2 million shares currently out on loan to short sellers, which is a jump of 24% compared to just one month ago on 12/15, and close to a 100% rise since the start of 2016. This real-time 2017 figure would already eclipse the 2016 high of 20.3 million shares short reported back on 11/15. Additionally, in terms of short interest as a percentage of float, our real-time estimate is now 36.5%, with 40% not too far out of reach at the current pace.
The S3 Crowding Indicator, which measures the magnitude of real-time shorting activity relative to a company’s float, registered a “crowding” score of 14 the middle of last week. This metric will highlight events that lead to a high probability that borrow rates will start to increase, and it has proved correct once again. It currently costs approximately 25% on an annualized basis to borrow shares to initiate a new short position in SunPower today, compared to “only” 8% over the previous 3 months of trading.
The recent surge in short interest could be due to the fact that President Elect Trump has openly been in favor of assisting the domestic oil, gas and coal sectors while shunning renewables. The uncertainty regarding future government solar subsidies, potential tax incentives and global trade policies do not bode well for the sector in general. Unfortunately for SunPower, the future doesn’t look nearly as bright as it once did.
For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.