Major solar energy stocks, led by Sunrun (RUN), experienced a dramatic sell-off in late February 2026 following disappointing financial guidance and broader industry pressures. Sunrun's stock plummeted 28% to $14.74 on February 27 after the company issued a cautious 2026 cash flow outlook, despite reporting strong fourth-quarter earnings that significantly beat analyst estimates.
Sunrun's Q4 2025 earnings came in at 38 cents per share, vastly exceeding the 3-cent estimate, while revenue surged 124% year-over-year to $1.16 billion. However, the company's guidance for 2026 cash generation of $250 million to $450 million, with a midpoint of $350 million, implied a decline from the $377 million generated in 2025. This cautious forecast prompted Jefferies analyst Julien Dumoulin-Smith to downgrade the stock from Buy to Hold, maintaining a $22 price target. He cited a "defensive posture" and expectations for a prolonged market contraction. The company also disappointed investors by not announcing anticipated capital returns like dividends or share buybacks.
The weakness quickly spread across the entire solar sector. On February 27, SolarEdge (SEDG) fell 9.5% to $36.57, Array Technologies dropped 34%, Shoals Technologies lost 31%, and the Invesco Solar ETF fell 8% for its worst week since June. The sell-off was attributed to a combination of factors squeezing the industry. Tariffs are pressuring margins for companies like First Solar, Array, and Shoals. Federal energy policy changes have reduced consumer incentives, leading to weakening demand. Research firm Wood Mackenzie estimates U.S. residential solar installations will fall 18% in 2026, a trend evidenced by Sunrun's 17% fewer subscriber additions in Q4 2025 versus the prior year.
First Solar's backlog declined to 50.1 gigawatts at the end of 2025 from 68.5 GW at the start of the year, marking seven consecutive quarters of sequential decline. SolarEdge, while beating its own Q4 EPS and revenue estimates, remains unprofitable with a net margin of -34.2%. Analyst consensus on SEDG sits at "Reduce" with an average price target of $27.28, below its trading price.
