Why Vivint Solar Inc.'s Shares Plunged 16% Today

Markets Motley Fool

What happened 

Continue Reading Below

Shares of residential solar installer Vivint Solar Inc. (NYSE: VSLR) dropped as much as 15.6% today as investors began to realize that the company's future could get a lot dimmer if President Trump imposes tariffs on solar module imports. At 2:40 p.m. EDT, shares were still down 12.3% and the negative sentiment around all solar stocks was driving the whole industry down. 

So what

On Friday, the International Trade Commission ruled in a Section 201 trade case that bankrupt solar manufacturers Suniva and SolarWorld were "injured" by solar imports. In the next couple of months, the commission will make a recommendation to the president as to what remedies should be put in place to protect the U.S. solar manufacturing industry. 

The impact on Vivint Solar is certain to be higher costs for solar modules that are the core of its business. And costs could rise well over 10% if price floors of $0.78 per watt are implemented, as Suniva suggested. Higher costs mean Vivint Solar will either have to raise prices or absorb lower margins, neither of which is good for the business long term. 

Now what

Continue Reading Below

There are enough challenges facing Vivint Solar from changing net metering rules to intense competition and this is another terrible blow to the company. It's hard to see how conditions will improve for Vivint Solar in 2018 with tariffs on the horizon and investors are seeing that risk as well. Until we know what the ruling from President Trump is, it will be tough to know the impact on Vivint Solar, but it's safe to say the company's prospects got a bit dimmer in the last few days. 

10 stocks we like better than Vivint Solar
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Vivint Solar wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.