Sunrun Inc

Sunrun Inc. (NASDAQ: RUN) is a home solar, storage, and energy services company. The Company is engaged in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems (Projects) in the United States. The Company is engaged in providing solar energy services and products to customers.

Recent Financial and Business Updates:

• Impressive Expansion in Storage and Solar Capacity: Sunrun achieved notable milestones in the second quarter, installing 103 Megawatt hours of storage capacity, marking a 35% year-over-year increase, and reaching a total of 918 Megawatt hours in networked storage capacity. The attachment rates for storage surged to 18% of new installations, with recent backup storage attachment rates for new sales nearly doubling, exceeding 30% nationally. This growth significantly enhances the Net Subscriber Value outlook for forthcoming quarters.
• Broadening Sales Activities and Solar Energy Capacity: In Q2, Sunrun extended its sales activities beyond California, experiencing a 25% year-over-year growth rate. This expansion momentum continued throughout June and July. The solar energy capacity also demonstrated impressive progress, with 296.6 Megawatts installed in Q2, surpassing guidance expectations and reaching a total of 6.2 Gigawatts in networked solar energy capacity.
• Strong Financial Position and Substantial Subscriber Growth: Sunrun maintained its robust financial position, with a Net Subscriber Value of USD 12,321, reflecting a USD 321 increase from Q1. Net Earning Assets increased by USD 409 million, reaching USD 4.4 billion, including a USD 78 million boost in Total Cash compared to Q1. Q2 2023 witnessed Customer Additions of 39,755, including 32,389 Subscriber Additions. As of June 30, 2023, Sunrun's customer base expanded to 869,464, including 724,784 Subscribers, signifying a 20% growth compared to Q2 2022.
• Strong Subscriber Metrics: Annual Recurring Revenue from Subscribers exceeded USD 1.1 billion as of June 30, 2023, with an Average Contract Life Remaining of Subscribers at 17.9 years. Subscribers demonstrated a value of USD 44,727 in Q2 2023, with a Creation Cost of USD 32,406. Net Subscriber Value reached USD 12,321 in the same quarter, and Total Value Generated amounted to USD 399.1 million. On a pro-forma basis with a 7.25% discount rate, consistent with current capital costs, Subscriber Value stood at USD 40,510, Net Subscriber Value at USD 8,104, and Total Value Generated at USD 262 million.
• Outlook and Growth: Sunrun's management is committed to sustainable and profitable growth, emphasizing unit cash generation capabilities and prudent working capital management. They anticipate Solar Energy Capacity Installed to grow by 10% to 15% for the full year 2023 and expect a growth range of 255 to 275 Megawatts in the third quarter of 2023. Net Subscriber Value is expected to notably increase in the second half of 2023 compared to the first half.
• GAAP Results and Financing Activities: Total revenue in Q2 2023 reached USD 590.2 million, reflecting a USD 5.6 million increase from the same period in 2022. Customer agreements and incentives revenue increased by USD 42.3 million, reaching USD 302.1 million, while solar energy systems and product sales revenue decreased by USD 36.7 million to USD 288.0 million. The company experienced a 9% year-over-year increase in total cost of revenue and an 8% year-over-year increase in total operating expenses. Net income attributable to common stockholders was USD 55.5 million, or USD 0.25 per diluted share.
• Strong Financing and Growth Prospects: Sunrun is well-positioned for growth with robust financing activities, securing expected tax equity to fund over 330 Megawatts of Solar Energy Capacity Installed for Subscribers beyond the capacity deployed up to June 30, 2023. Additionally, Sunrun has USD 140 million available in a non-recourse senior revolving warehouse facility for funding over 50 Megawatts of Solar Energy Capacity Installed. They have further enhanced their financing capabilities through term-out debt transactions, increasing unused commitments to USD 400 million, which could fund over 150 Megawatts for Subscribers.

Technical Observation (on the daily chart)

The price of RUN stock has shown a consistent downward trend since making its 52-week high on December 14, 2022, with a correction of approximately 71.05%. Currently, the stock is near an important support zone of USD 8.00-USD 10.00, from where price has taken support in the past. The RSI (14 period) momentum indicator is in a downward trend currently in oversold levels, with currently at a value of 22.99, with expectations of a short-term upward momentum or some consolidation. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given Sunrun Inc. (NASDAQ: RUN) at the current market price of USD 9.72 as of October 06, 2023, at 06:45 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 06, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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