Investing

Sunnova Energy Stock Up 44%, but Shorts Are Now Piling On

Jordan Chussler

Published: July 18, 2024 11:19 am

After being founded in 2012 and going public in 2019, Sunnova Energy International Inc. (NYSE: NOVA) has made a name for itself in the residential and commercial rooftop solar energy industry. In 2022, it was described as one of the largest solar providers in the U.S. 

In the beginning, the company was enjoying its growth alongside increasing demand for solar energy as demand in the U.S. increased. On Jan. 22, 2021, the stock reached its all-time high closing price of $53.89 per share.

However, despite seeing a 44% gain over the past month, NOVA remains down 86.47% from it’s all-time high. And as a result, short sellers have zeroed in on the company after its recent share run-up. 

Big-Time Short Seller Interest

Of the company’s 107.75 million shares accounting for its public float — the total number of shares available on the market less those held by company insiders — 35.76 million, or 38.82% of the float, is currently being shorted, according to Yahoo! Finance. The short interest ratio is 4.41 days to cover. 

Insiders, like short sellers, have also taken notice. According to Nasdaq.com, over the past 12 months, sellers have outnumbered open market buyers 15 to 9 as the company’s current price-to-earnings (P/E) ratio of -4.05 is failing to inspire investors. Forecasts for Sunnova Energy International’s P/E ratio for the next two years are similarly weak, with 2025’s estimate at -4.16 and 2026 projected at -4.65. 

And while the Wall Street Journal’s one-year median price target of $10 does not seem terrible based on NOVA’s current share price of $6.96, which would be good for a 43.67% increase, there is reason to shed doubt based on the company’s lackluster financials. When Sunnova Energy International announces second quarter earnings on July 31, 2024, analysts’ consensus forecast is for -63 cents per share, which would be a 10.5% decrease from the first quarter’s -57 cents per share.

Those negative earnings are built on the back of -$417.961 million in net income losses for 2023. That same year, the company posted -$51.172 million in free cash flow. On a yearly basis, the consensus earnings per share for NOVA in 2024 are -$1.85. In 2025, that figure is expected to worsen to $1.80.