Solar stocks are in the red today after a surprise setback from Capitol Hill spurred an industry-wide downtrend. sunrun (NASDAQ:CLASSES), Sun Power (NASDAQ:SPWR) and First Solar (NASDAQ:FSLR) are down about 8%.
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What do these sunny stocks look like cloudy today?
The Build Back Better Act hit a major roadblock after Sen. Joe Manchin said he did not support the social spending proposal. His decision effectively ended negotiations on the bill, at least until the new year.
Manchin’s office released a statement on his decision. He said:
“My fellow Democrats in Washington are determined to radically reshape our society in a way that makes our country even more vulnerable to the threats we face. and inflationary taxes that are real and harmful to all Americans who work hard at the gas pump, in the grocery stores, and on utility bills with no end in sight.
The legislation included a record $555 billion in climate change investments, including nearly $300 billion in green energy tax incentives. Manchin’s decision is therefore a blow to many renewable energy companies.
How bad is the BBB rejection for solar stocks?
Manchin’s decision spurred a sell-off in solar stocks, adding to an already tumultuous year. After a huge spike in January, both Sunrun and SunPower saw steep declines. SPWR hit a 52-week high of $57.52 on January 29, but fell back to $19.80 today – and falling. RUN has a similar story: shares hit a record high of $100.93 on January 12. Today, they are trading against $31.62.
Despite the gloom surrounding the industry today, there is still a lot to bet on solar bulls. On Friday, the Solar Energy Industries Association revealed Q3 solar installations saw a 33% increase year-over-year increase, largest Q3 on record. Additionally, US residential solar installations surpassed 1 gigawatt (GWdc) of solar capacity for the first time ever and more than 130,000 systems in a quarter. Utility-scale solar had an equally record-breaking quarter.
Solar growth is a practical certainty, especially given President Joe Biden’s goal of 100% carbon free energy by 2030. This is on top of the rapid demand for solar panels in places like California and Texas.
Regardless of the short-term outlook, in the case of solar stocks, it’s always worth keeping an eye on the sky.
As of the date of publication, Shrey Dua had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
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