Sunrun (NASDAQ: RUN), the largest residential solar installer in the U.S., has experienced a significant decline with a market capitalization of $2.5 billion and a 36% drop in its stock value over the last year, currently trading around $11. Concerns are rising that the stock could fall to approximately $7 if market conditions worsen, similar to the 40% drop during the Covid-19 crisis.
Recent legislative changes, including the expiration of key federal tax credits such as the 25D Residential Solar Credit and the introduction of tariffs on imported solar equipment, are tightening Sunrun’s operational framework. These changes jeopardize the company’s business model which heavily relies on these incentives to remain competitive, especially as it adapts to new compliance requirements.
Historically, Sunrun has underperformed the S&P 500 during downturns, plummeting 67.4% during the 2022 inflation-driven selloff compared to the S&P 500’s 25.4% drop. Investors are closely monitoring the company’s ability to pivot quickly amid these regulatory challenges and declining incentives to sustain growth and profitability.
