Sunnova stock falls sharply as it warns about long-term ability to operate

Sunnova Energy, a major U.S. installer, is warning investors that it may struggle to stay in business beyond 2025, as the residential solar market struggles against macro-economic and public policy challenges.

Shares of Houston-based solar company fell by as much as 71% Monday, following the release of its end-of-year financial results for 2024. The disclosure included a so-called “going concern” statement – a note warning investors that the company could run out of money to operate within the year.

While the company has a plan to manage its cash issues, “substantial doubt exists regarding our ability to continue as a going concern for a period of at least one year,” the disclosure said.

In a statement to EnergySage, Sunnova spokesman Russell Wilkerson also said that between cash on hand, a new $185 million loan arrangement, and cost-cutting initiatives—Sunnova announced layoffs of about 15%of its workforce in February— the company is “confident in our ability to manage our obligations and position Sunnova for long-term success.”

Yet the news serves as another jolt for the rooftop solar industry. Competitor SunPower fell into bankruptcy last year, while Sunrun, the largest residential solar installer in the U.S., laid off around 100 workers in January as it sought to cut costs. Sunnova isn’t the U.S. market leader in solar install, but it’s one of the major players in the industry, recording some $840 million in revenue in 2024.

While solar installations have experienced a strong upward trajectory in recent years, especially at utility scale, rooftop growth has slowed since 2023. In December, a report published by the Solar Energy Industries Association (SEIA) projected a 26% drop in installations in 2024 compared to the prior year.

Wilkerson, the Sunnova spokesman, pointed to debt management as well as an uncertain public policy environment as among the main issues facing the company. In a call with analysts, Sunnova CEO John Berger pointed to the cumulative impact of a confluence of economic factors putting pressure on the business.

"While total cash increased, unrestricted cash remained relatively flat, below our estimated $100 million increase," he said on Monday's call. "This miss was primarily due to lower tax equity contributions stemming from timing delays of ITC sales, fewer installed systems, and funds received in December classified as restricted."

Berger also mentioned high interest rates, which he said slowed consumer demand and made lenders more cautious, and returned regularly in his comments to the issue of political and regulatory uncertainty following the 2024 Presidential election.

Notably, federal clean energy tax credits – which include a 30% tax credit for rooftop solar installations – are potentially at risk as Republicans in Congress seek ways to pay for other priorities during budget talks that recently began. Since taking office, President Trump has already ordered a freeze on funding allocated for the Inflation Reduction Act (IRA), the landmark 2022 legislation that expanded those tax credits. Whether the federal solar tax credit remains in place in future years is yet to be seen, with obvious implications for the solar industry and households considering going solar or investing in clean energy upgrades.

For his part, Berger said he is hopeful that changes to the IRA will be “much lighter” than it may have otherwise been due to aspects of the law that make the tax credits more politically popular, such as requirements for domestic manufacturing of clean technologies.

More broadly, he said he is hopeful the industry’s outlook is brightening as power demand across the U.S. surges and interest rates. But he was straightforward about the issues that have brought the company to this point.

“The overall environment is terrible," Berger said on Monday's call. "It's the political environment, the capital markets, look at the equity trading off. That just gets everybody in a very bad mood, candidly."