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Solar Stocks (SCTY, SPWR) Slump on Earnings, Trump Victory

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Shares of some of the market’s most popular solar energy stocks, including SolarCity and SunPower (SPWR - Free Report) , as well as the Guggenheim Solar ETF (TAN - Free Report) and the Vaneck Vectors Solar ETF , continue to slump Thursday as the market adjusts to Donald Trump’s upset victory in the election and relatively mixed earnings results.

In the midst of a merger with electric car giant Tesla Motors (TSLA - Free Report) , SolarCity released its third-quarter earnings report on Wednesday. SolarCity posted an adjusted loss of $2.27 per share, narrower than the Zacks Consensus Estimate of -$2.35 per share but well below the -$2.10 per share the company posted last year (SolarCity Reports Narrower-than-Expected Q3 Loss).

Although SolarCity was not able to post earnings growth this year, the company’s revenues surged 76.6% to $200.6 million, which beat our consensus estimate of $168 million. Considering its impending deal with Tesla, SolarCity did not provide any guidance in its report.

Another major play in the solar industry, SunPower, also reported its third-quarter results on Wednesday. SunPower posted adjusted earnings of 56 cents per share, which missed the Zacks Consensus Estimate of 67 cents but came in well ahead of last year’s figure of 3 cents per share. The company’s quarterly revenue was up 74.5% year-over-year to $770.1 million, but that figure fell just short of our consensus estimate of $776 million (SunPower Lags Earnings & Revenue Estimates in Q3).

Wednesday’s mixed earnings results come just a day after Donald Trump’s shocking victory over Hillary Clinton, which promises to have serious implications on the energy industry. Trump didn’t shy away from his skepticism about global climate change, and much of his campaign focused on bringing back the traditional energy businesses of coal, oil, and gas.

Although Trump’s specific plans are relatively unclear, it does appear that the President-elect plans to roll back environmental regulations in an effort to support the American non-renewable energy industry.

For a solar industry that has relied on support from the government, this probably spells bad news, and the market knows it. Shares of TAN are down about 6.7% since Tuesday afternoon, and KWT has fallen about 5.5% in that time.

For now, the future of the solar business remains uncertain, and if there’s one thing that investors hate, it’s just that.

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