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:
Operating Metrics: During the first quarter of 2023, Sunrun added 32,413 customers, including 25,154 subscribers. As of March 31, 2023, the company had a total of 829,709 customers, including 692,395 subscribers, representing a 20% growth compared to the first quarter of 2022. The annual recurring revenue from subscribers reached USD 1.1 billion, and the average contract life remaining for subscribers was 17.6 years.
Discount Rate Adjustment: Starting from the first quarter of 2023, Sunrun increased the discount rate used to calculate the value of subscribers and gross earning assets from 5% to 6%.
Subscriber Value and Financial Results: In the first quarter of 2023, the subscriber value was USD 44,055, with a creation cost of USD 32,055. The net subscriber value amounted to USD 12,000, and the total value generated reached USD 301.8 million. Gross earning assets as of March 31, 2023, were USD 11.6 billion, with net earning assets of USD 4.0 billion, including USD 843 million in total cash.
Solar Energy Capacity and Outlook: The solar energy capacity installed in the first quarter of 2023 was 239.8 megawatts, with 187.8 megawatts dedicated to subscribers. The networked solar energy capacity as of March 31, 2023, was 5,907 megawatts, of which 4,952 megawatts were for subscribers. Sunrun's management expects solar energy capacity installed to grow in a range of 10% to 15% for the full year 2023, with a projected growth of 270 to 290 megawatts in the second quarter. They anticipate an increase in net subscriber value in the second quarter and expect it to be significantly higher in the second half of 2023 compared to the first half.
Financial Results: In the first quarter of 2023, Sunrun reported total revenue of USD 589.8 million, a 19% increase compared to the same period in 2022. Customer agreements and incentives revenue increased by 18% to USD 246.5 million, while solar energy systems and product sales revenue rose by 20% to USD 343.4 million. Total cost of revenue increased by 23%, and total operating expenses increased by 21%. The net loss attributable to common stockholders was USD 240.4 million, resulting in a loss of USD 1.12 per basic and diluted share.
Financing Activities: As of May 3, 2023, Sunrun had closed transactions and executed term sheets providing expected tax equity to fund over 450 megawatts of solar energy capacity installed for subscribers, beyond what was deployed by March 31, 2023. The company also had USD 522 million available in its USD 1.8 billion non-recourse senior revolving warehouse facility to fund over 175 megawatts of solar energy capacity installed 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 September 15, 2022, with a correction of approximately 58.74%. Currently, the stock is near an important support zone of USD 15.00-USD 17.00, from where price has taken support in the past. A breakout in upward direction from the range of USD 18-USD 19, would likely initiate a new short-term trend in the up direction with targets of USD 22.00 levels. The RSI (14 period) momentum indicator is at a value of 40.18, with expectations of some consolidation or a short-term upward momentum. 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.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Sunrun Inc. (NASDAQ: RUN) at the current price of USD 16.66 as of July 10, 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 Green colour line reflects the 21-period simple moving average (SMA) while the red 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 Black 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 Blue 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 July 10, 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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