Why Sun Is Not Shining on Maxeon Solar Technologies Today?
May 21, 2021 by InvestorDestination Team
Shares of Maxeon Solar Technologies Ltd (NASDAQ: MAXN) dipped 9.7% today after it announced its fourth-quarter results. The company's first-quarter revenue declined 28% YOY, and gross margin from last year's 1.4% to 0.6%.
Due to supply chain challenges, the company has decided to reduce module shipment to the power plant market outside China. The company has mentioned this during its fourth-quarter conf call. Its weak second-quarter guidance is reminding investors about its lingering supply chain challenges.
During the 2007 industry-wide polysilicon shortage, Maxeon's parent company SunPower entered a long-term polysilicon contract. Since then, polysilicon prices have declined, but Maxeon pays higher prices because of that long-term contract. Maxeon's lower gross profit can be partially blamed on this out-of-market polysilicon contract. This above market rate will be a drag on its profitability until 2022.
While the company has paused large-scale shipment outside China, it is marking progress in the US market. It has signed an agreement to supply ~1GW performance series for a large-scale project in the US.
The company continues to innovate. It has introduced a disruptive technology platform that enables the production of frameless, thin, lightweight, and conformable solar panels.
For the time being, long-term investors need to have patience
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