Solar technology and energy services provider SunPower (NASDAQ:SPWR) saw its shares rise dramatically higher on Wednesday. Earlier, the company announced that it will add the Tesla (NASDAQ:TSLA) Powerwall 3, a battery storage system, to its portfolio. While SPWR stock soared on the positive consumer implications, it remains a highly speculative investment.

According to a corporate press release, SunPower will offer the latest Powerwall system “as part of its curated portfolio of high quality and affordable solar and storage products.” Driving this decision was rising storage attach-rates, which sparked interest in battery storage options. Among them, the Powerwall represented the most-requested system. SunPower Senior Vice President Shawn Fitzgerald stated the following:

Homeowners are increasingly turning to battery storage to protect themselves against ongoing utility rate hikes and grid outages. We witnessed record-breaking battery storage sales in 2024 and see a future where almost all solar systems are paired with storage. Pairing Tesla Powerwall 3 with our industry-leading SunPower Equinox solar system was a natural progression in offering homeowners the best products on the market.

Previously, SunPower exclusively promoted its in-house energy storage system called SunVault to residential customers. CNET ran a side-by-side comparison between the SunVault and the prior iteration of the Powerwall. Both offered their own pros and cons, though the Powerwall was less expensive.

SPWR Stock Still Faces Significant Challenges

Although SPWR stock enjoyed a significant pop – about 19% up in late-afternoon trading – it can’t shake off its volatile reputation. Since the start of the year, shares fell approximately 34%. In the trailing one-year period, SPWR gave up roughly 68% of market value. Compounding matters is the small profile, with a market capitalization of around $570 million.

Following a dramatic ebb and flow between the back half of 2020 and the spring of 2021, SPWR stock attempted to find its footing. However, the floor collapsed in 2023. According to another CNET article, California – which represents the country’s biggest residential solar market – cut the compensation rate by which solar-generated power can be sold back to the grid.

In addition, high interest rates negatively impacted households’ ability to finance solar power systems. During this time, some solar companies faced greater risk of bankruptcy. Notably, Gurufocus warns that SPWR stock carries an Altman Z-Score of 1.44 points below zero, indicating distress and a possibility of bankruptcy in the next two years.

Why It Matters

Adding to the challenges, Wall Street analysts rate SPWR stock a consensus moderate sell. The breakdown of six holds and five sells leaves little room for alternative interpretations.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.