SunPower's Strategic Resilience: Navigating the ITC Phase-Out with Confidence

In a solar industry bracing for regulatory headwinds, SunPower (SPWR) has emerged as a paradoxical beacon of stability. The company's first profitable quarter in four years, shareholder-approved strategic moves, and CEO T.J. Rodgers' unshakable confidence in breakeven metrics position it as a consolidator in a shifting landscape. With the Investment Tax Credit (ITC) phase-out looming, SunPower's June 5 update will be pivotal in proving its ability to thrive in a subsidy-free era. Here's why investors should take note.

The ITC Phase-Out: A Catalyst for Consolidation

The ITC's gradual reduction from 30% to 10% by 2032 poses a existential threat to smaller solar firms reliant on subsidies. Rodgers, however, views this as an opportunity. In his shareholder letter, he argued that ending subsidies will “force the industry to mature,” enabling SunPower to capitalize on weaker competitors. The June 5 update will detail how the company plans to maintain profitability even if the ITC terminates abruptly by year-end—a worst-case scenario where quarterly revenue would still remain above the critical $72 million breakeven point.

Ask Aime: Should I buy SunPower stock, considering their second-quarter results and the phase-out of the Investment Tax Credit?

Rodgers' assurance is bolstered by SunPower's Q1 2025 results: $80.2 million in revenue and a $1.3 million profit, marking a stark turnaround from years of losses. With a 43% gross margin, the company is proving that operational efficiency and scale can offset subsidy declines.

Strategic Acquisitions and Shareholder Backing

The cornerstone of SunPower's strategy is inorganic growth. The $72 million breakeven threshold is achievable partly due to the SPWR asset acquisition, which expanded its workforce tenfold and revenue by 1,470% since 2024. Shareholders endorsed this path decisively: 96% approved an employee stock plan to integrate 1,000 new hires from acquisitions, while all 12 proposals at the May 29 Annual Meeting passed with over 95% support.

Rodgers emphasized that the ITC phase-out will accelerate consolidation. “We're ready to acquire distressed competitors,” he stated, noting that pre-approved shares and a $14 million cash buffer give SunPower flexibility to act. The recent partnership with REC Group—a solar equipment manufacturer—adds technical depth, ensuring SunPower's products remain competitive in a price-sensitive market.

Valuation: A Hidden Gem at $1.26

At a price of $1.26 per share, SunPower trades at a fraction of its intrinsic value. Analysts project a 2025 EPS of $0.16, implying a P/E ratio of just 7.8x. This starkly contrasts with peers like Enphase Energy (ENPH), trading at 38x forward earnings. The disconnect reflects skepticism over the ITC phase-out's impact, but Rodgers' breakeven analysis and acquisition pipeline suggest a compelling upside.

The June 5 update is a critical catalyst. If the call confirms SunPower's ability to sustain profitability and outlines acquisition targets, shares could re-rate sharply. Meanwhile, the company's rebranding—from Complete Solaria back to SunPower—reinforces its identity as a leader in high-efficiency solar technology, a narrative that could attract institutional investors.

Risks and Considerations

The ITC phase-out remains the largest overhang. While Rodgers dismisses short-term risks, a faster-than-expected subsidy withdrawal could strain margins. Additionally, SunPower's workforce reduction—from 3,499 to 906 employees—raises questions about execution risks in integrating acquisitions. Lastly, the broader solar sector faces tariff wars and oversupply, which could pressure pricing.

Investment Thesis: A Buy with a 2026 Horizon

SunPower's stock is a bet on Rodgers' ability to execute a disciplined consolidation strategy and adapt to post-subsidy realities. The June 5 update will test investor confidence, but with a low breakeven point and a reinvigorated balance sheet, the company is positioned to outlast weaker peers.

Recommendation: Buy SPWR with a 12–18 month horizon, targeting $3–$5 per share by late 2025/early 2026. The stock's undervaluation and strategic clarity make it a compelling play in a sector transitioning from subsidy dependency to free-market discipline.

In a solar industry at a crossroads, SunPower's blend of financial discipline, acquisition firepower, and shareholder alignment makes it a rare survivor—and possibly a consolidator—in a subsidy-starved future. The June 5 update will be the first stress test of this vision.