Solar energy stocks and sector-related exchange traded funds dimmed Tuesday, plunging below their short-term trend line, as an unexpectedly poor third quarter from SunEdison (NasdaqGS: SUNE) dragged on the industry.
On Tuesday, the Guggenheim Solar ETF (NYSEArca: TAN) fell 5.3% and the Market Vectors Solar Energy ETF (NYSEArca: KWT) dropped 5.4%. Both TAN and KWT dipped below their short-term, 50-day simple moving average.
Solar stocks weakened Tuesday after U.S. solar company SunEdison revealed a bigger-than-expected third-quarter loss of $0.92 per share, compared to estimates of $0.65, reports Chris Martin for Bloomberg.
SunEdison shares plunged 21.0% Tuesday and traded as low as $5.59 earlier in the day, its lowest level in over two years.
SUNE makes up 4.9% of TAN and 4.6% of KWT.
Chief Executive Officer Ahmad Chatila has laid off workers and slowed growth to assuage investor fears about the company’s financial liquidity.
SunEdison spent more than $6 billion on acquisitions over the past year, which has led to funding concerns for additional projects. Due to its ballooning costs, the firm cut 15% of its workforce last month, Reuters reports.
In light of its diminishing coffers, the company has stated that there were “no assurances” it would raise the $6.5 billion to $8.8 billion needed to fund the construction of renewable energy assets through 2016.
Moreover, the company said it would reduce sales of renewable energy assets to its so-called yieldcos until conditions improve.
The photovoltaic panel maker was the first solar company to launch a yieldco in July last year – a yieldco is a dividend growth-oriented company that groups renewable or conventional long-term contracted operating assets to generate steady cash flows for investors. However, the strategy has grown less attractive in light of the continued cheap crude oil environment.
Guggenheim Solar ETF
For more information on the photovoltaic panel industry, visit our solar category.
Max Chen contributed to this article.