Analysis: What I Invest in and Why By Baldous Gates Uploaded April 21, 2025 May 17, 2025: Company name updated and other minor changes May 20, 2025: Notes added and other minor changes Disclaimer: The following is just my researched opinion and does not constitute financial advice. I am not a financial advisor or financial industry professional. I am also not affiliated with the company that is the subject of this analysis, other than investing in their stock. I'm simply a retail investor. I have tried my best to provide a comprehensive and accurate analysis but cannot guarantee completeness or accuracy. Please conduct your own due diligence before making investment decisions and consult a financial advisor, if necessary. Thank you for checking this out, and I wish you success in your investing endeavors. There are 5600+ companies listed on the NYSE and Nasdaq markets. Of all these companies, I believe one company is truly worthy of investment: SunPower (tickers SPWR and SPWRW, hereinafter "SPWR"). I chose to invest in SPWR because: 1) I want to stand on my principles and invest in a company that fully embodies them, and 2) I believe in the long-term financial prospects of the company. In more concrete terms, SPWR is a great investment because of the people, the product, and the freedom the company encompasses and represents. Before diving into the analysis, I'd like to point out the recent change in the company's name from Complete Solaria (hereinafter "CSLR") to SunPower. I originally invested in CSLR. After CSLR purchased the assets and name of the old, defunct SunPower company (hereinafter "Old SunPower"), CSLR changed its name and ticker to SunPower and SPWR, respectively. When I mention CSLR, I'm referring to the company before the asset purchase. It's also worth noting that the CEO of CSLR and subsequently SPWR used to be the CEO and Chairman of Old SunPower in its heyday. After he left in 2011, Old SunPower was poorly managed, eventually going bankrupt, and its assets being acquired by CSLR for reinvention. I. THE PEOPLE A company is nothing without people to run it, and success is led by people at the top. For SPWR, the discussion begins with Mr. Thurman John "T.J." Rodgers (hereinafter "TJ"), the Chairman and CEO of the company. TJ began his career as an engineer, inventing VMOS, then founding Cypress Semiconductor in 1982 and leading the company to a multibillion dollar valuation. He also later served as Chairman and CEO of Old SunPower (turning it into a $10+ billion industry powerhouse) and provided leadership as a member of the boards of Enphase Energy, Bloom Energy, Enovix, FarmX, FTC Solar, and Bespoken Spirits. Given TJ's impressive but relatively straightforward bio, you may be asking: So what? What sets him apart from any other multitalented billionaire CEO? Simply put, TJ is a unicorn in the world of small cap companies because: A) TJ is uncommonly honest and forthright, B) he genuinely cares about employees and investors, and C) he's a true winner. A. How is TJ honest and forthright? As with all ventures worth embarking on, the road has been rocky for CSLR since its inception as a public company in July 2023. Among the mishaps and curveballs were an aborted CEO hiring, a short attack based on leaked information, and an attempt by a private equity partner to pull the plug. Along the way, TJ has not only guided CSLR deftly through each challenge but also kept the investing public well-informed of the good, the bad, and the ugly. While other CEOs are busy hiding or spinning embarrassing situations or mistakes, TJ discloses material information in a clear and transparent way for the benefit of investors. Of note, the press releases detailing CSLR's debt struggle with private equity firm Carlyle are particularly fascinating. At one point, TJ calls out private equity firms that use strong arm tactics as "thugs" and asks his antagonists to take their "knee off of [his] neck, so [he] can breathe." Those press releases may be the most candid, rock-and-roll ones ever issued by the CEO of a public company. The man just tells it like it is. B. How does TJ care about employees and investors? Before TJ took over as CEO in April 2024, CSLR went through a period where its future as an ongoing concern was questionable. Leading up to that period, CSLR had reduced its employee count from 428 to 109 as a matter of survival and even experienced a short attack that decimated its share price. To save the company and its remaining 109 employees, TJ put in $10M (in the form of convertible notes) to keep the lights on and another $10M later to satisfy the Carlyle debt. After those dark days of struggling for survival, more investors saw the light and put their money into CSLR. To their credit, Carlyle, knowing a good investment opportunity, bought back in after releasing CSLR from its debt. With these investments, structured as convertible notes, TJ was careful to keep dilution reasonable and protect shareholder value. As a result, CSLR did not make a public offering (beyond initial merger) nor did it execute a reverse split, even when the share price seemed hopelessly buried under a dollar. While most small/micro caps are busy milking and bilking retail investors into oblivion with rinse-repeat RS-offering combos moves, CSLR was busy trying to maintain value. Now, rechristened as SunPower, the company is looking to grow. To execute on its rapid acquisition strategy, SPWR may do offerings in the future, but I believe such dilutions will be justified by their future returns. (Note about employees: After the Old SunPower acquisition, the combined workforce has been further reduced in order to make the combined entity financially feasible. TJ has described this as the "Noah's Ark" model, where select employees can weather the macroeconomic storm that has taken out over 70 solar companies. Given the adverse market conditions, it is admirable that CSLR was able to find a way to finance the SunPower deal and salvage about 1000 jobs. I believe current market conditions for the solar industry constitute a down cycle that will improve dramatically in the near term.) C. Why is TJ a winner? As stated above, TJ has led multiple companies to multibillion dollar valuations. Exercises of his management wizardry include the reclamation of Old SunPower and the rise of Enphase. In particular, by streamlining management and operations at Enphase, he helped turn the company around from a share price of about $0.92 in 2017 to a all-time high of about $336 in 2022. That's a high-growth turn around in three years and a 300x+ return in five years, and it's the same playbook he's running at SPWR right now. Given TJ's leadership at Old SunPower and how he turned things around at Enphase, if I had to choose the highest probability moonshot stock over a three year time horizon, it would be SPWR. Given the three qualities outlined above, you may be thinking: So what? Does a CEO even matter that much? Well, if money doesn't trickle down, leadership definitely does. Since taking over as CEO, TJ has revamped the org chart from C-suites down and instilled the values necessary for employees to right the ship and turn SPWR into a dominant player. The original employee count has been reduced by about three-fourths, and the employees coming over from Old SunPower are a hand-picked one-third. These remaining, high-caliber employees have been given modest bonuses and awarded stock options that will bear fruit if the company does well. In other words, SPWR's employees are a streamlined, top-notch, motivated workforce. II. THE PRODUCT Once the right people are in place, a company needs a product to make money. SPWR's product is solar energy. More specifically, SPWR sells and installs residential and commercial solar energy systems through an online platform that makes the process easy and affordable. Helping people save money by providing clean and cheap energy is certainly a noble goal, but as an investor, you might be wondering: Can this company succeed financially? How big can they get? I'll answer these questions A) by considering the solar energy industry as a whole, then B) delving into the financial particulars of SPWR. A. The Industry. Silicon-based solar cells have been around for over 70 years, during which they have become more efficient and cheaper to produce. Currently, the wholesale price per watt is less than 1% of what it was 50 years ago (side note: imagine the price of gasoline doing that - we'd be paying a penny or two per gallon!). The share of renewable energy used in global energy production is expected to double by 2030, and solar is expected to account for 80% of that share. Similarly, only about 5% of US homes have installed solar over the past quarter century, and that number is expected to double in the next five years. According to the US Energy Information Administration, solar is the fastest growing source of electricity in the US. Clearly, solar energy has emerged as the cleaner, cheaper way to provide power at scale. (Note: In terms of cost effectiveness, solar is very effective. Does it beat every other method of power generation? It depends on what vested interest you ask. Depending on the region, time frame, and accounting methodology, the cost effectiveness of the various means of power generation varies widely. I'm not writing a doctoral thesis so I won't do a deep dive into that. However, please consider: Why would solar be the fastest growing energy source if it weren't so good? Cost aside, would you rather live next to a fast neutron reactor, coal power plant, or solar farm?) For me, it's a no-brainer to roll into humanity's future with solar. However, macroeconomic conditions have yet again made solar's path to dominance unnecessarily difficult. These conditions include higher interest rates, tariffs, and changes to net metering laws. I'll briefly go over each and explain why SPWR is poised for lift off. Interest Rates: For the past several years, the Federal Reserve has implemented quantitative tightening and raised the funds rate to combat inflation. The resulting higher interest rates have hit the solar industry particularly hard because solar installations are often leased or financed. However, inflation has declined enough and the economy is looking shaky enough for the Fed to contemplate lowering the funds rate. Indeed, the Fed decided to slow down quantitative tightening in their March meeting and are expected to lower the funds rate twice this year (four times if the recent tariffs hold). In other words, we are currently at an inflection point, the beginning of a multiyear rate decline that favors SPWR once again. Tariffs: The past two administrations have hit solar panels and components with tariffs. Although tariffs hurt solar companies initially, destroying some, the surviving companies have diversified their supply chain, becoming stronger in the process. New solar cell plants have opened in Georgia and South Carolina, and there are even plans for factories in unexpected places like Ethiopia. In this environment of supply chain reorientation, SPWR is well-positioned to succeed. Having led Cypress and Old SunPower, TJ has extensive experience with semiconductor and solar-related sourcing and manufacturing. He also has deep connections for sourcing solar components, given his involvement with Enphase, FTC, and Enovix. If there is one ideal person to make sense of the messy solar supply chain puzzle, he happens to be working at SPWR. (Note: The most recent tariffs imposed by executive order, dated April 2, 2025, apply to more than 180 countries. However, it appears the solar industry may not be affected as the order specifically exempts "energy and energy products". Regardless, a diversified solar supply chain is a good one.) Net Metering: Net metering allows homeowners with solar panels to feed energy they produce back into the power grid and receive credit or payment for it. This compensation was a big incentive to go solar, but net metering laws were changed two years ago in California to reduce this compensation by about 75%. Certain other states have reduced compensation as well, leading to a dramatic drop in new solar installations. However, we once again find ourselves at the beginning of an upswing in the solar industry because changes to the net metering laws have spurred a new way for customers to benefit from solar: battery storage. With better and cheaper battery systems, homeowners can store solar energy produced during off-peak hours (i.e. when electricity is cheap) and use it during peak hours (i.e. when electricity is expensive). As evidenced by the 64% growth in solar battery systems in 2024 (according to Bloomberg), the solar-battery combo has become the killer use case that will catalyze the next industry boom. Given TJ's deep involvement with battery producers like Enphase and Enovix, SPWR is well-positioned to take advantage of the emerging growth cycle. The combination of interest rates, tariffs, and net metering changes could have knocked out SPWR, but the company keeps fighting back. Now, it's at a point where the three liabilities are turning into tailwinds, and the company is ready for takeoff. Having said all of that, I should point out that macroeconomic conditions remain risks to be weighed carefully. Future changes in any of the three conditions mentioned above could threaten not only the viability of SPWR but that of the entire industry as well. Since there are significant risks involved, it's important to understand these risks and invest accordingly. Speaking of risks, I'd like to mention a couple more. There is recent talk of Congressional action possibly eliminating the solar tax credit introduced by the Inflation Reduction Act. If Congress were to take such action, it could damage a solar industry that has been emerging in a big way the past couple years. Although such action is a possibility, I don't think it's likely because states like Kentucky, Texas, and Georgia have benefited so much from the measure. Whether by customers, employees, investors, or municipalities, taking away the tangible benefits of solar would be felt keenly. I can't see how the miniscule fiscal returns for such deprivation would be worth the political blowback. It would be like cutting off one's nose to spite one's face and wouldn't make any sense. (Note: The fiscal returns for the government would amount to 1M average annual residential solar installs multiplied by $6500 average tax credit, or $6.5B. The annual federal revenue is $5T so the $6.5B return would amount to an extra 0.12% of revenue for the government. Would you knee cap an entire industry critical to energy independence, national security, and the country's technological future? And piss off your constituents? For a drop in the bucket? Like I said, it wouldn't make any sense.) (Update May 17: The budget bill proposed by the House keeps 48E tax deductions until 2028 and then phases them out over three years. Additionally, the proposed bill ends 25D tax credits by the end of 2025. I believe these changes would boost solar sales for two quarters and give SPWR some time to expand their footprint, pivot to solar and battery technology, and solidify their leasing/PPA program. TJ has said he'd like to see the government lessen their involvement in the energy industry and just let the market decide winners and losers. Even without any tax credits, I believe rising energy costs, due to the advent of AI and the slow time-to-market for nuclear reactors, will necessitate solar systems, especially for residential purposes. Whatever the case, it's unclear whether there will be a final budget bill, what it will contain, and how it will affect SPWR, so it's a significant risk to consider.) A second potential risk is the Commerce Department's consideration of additional tariffs on Southeast Asian countries. Again, danger-danger. However, as mentioned in the section about tariffs, I'm confident TJ can navigate these waters. For example, one of the hardest solar components to source is the battery because China produces the vast majority of them and is levied the highest tariffs (between 80 and 145% depending on application method). Soon after the April 2 tariffs were revealed, Enovix announced the acquisition of a South Korean battery manufacturing facility from SolarEdge. South Korea has an imposed tariff rate of 25%, less than that of China pre-April 2 tariffs, and that 25% may be negotiated down during the tariff pause. It remains to be seen how the extra capacity of the South Korean facility will be employed, but keep in mind an important point: the chairman of Enovix happens to be TJ. Having examined the state of the industry and external factors affecting SPWR, let's move on and take a look at the company's numbers to see where it can go as an investment. B. The Numbers. Let's throw out some numbers first, then analyze them to see what SPWR should be worth now and in the future. I'm gonna keep things as simple as possible in this section because of my nerfed math brain, not to mention my limited accounting and financing expertise. More importantly, the numbers help determine good entry and exit points for an investment position, but if the company has the right people, product, and mission, the numbers should take care of themselves. With the ideal investment, the right entry point should be "always" and the right exit point "never" (although that's probably asking for too much, so value should be considered). (Note: While it's true that numbers aren't my strength anymore, I don't want to sell myself short. By a certain metric, there was a time when I was ranked in the top ten nationally in mathematics in high school. Although it's not as legendary as throwing four TDs in a single game for Polk High, I mention it sometimes to impress the ladies. It does not have the intended effect.) Basic numbers from Yahoo Finance, as of April 11, 2025: Market Cap: 105.86M Share Price: 1.4350 Trailing P/E: N/A Forward P/E: N/A Revenue (ttm): 40.8M EBITDA: -61.76M Operating Cash Flow (ttm): -40.76M Levered Free Cash Flow (ttm): -28.37M Total Cash (mrq): 79.5M Total Debt (mrq): 204.72M ----- Numbers for Sunrun (RUN) Market Cap: 1.42B Share Price: 6.29 Trailing P/E: 1070 Forward P/E: 85.47 Revenue (ttm): 2.04B EBITDA: 47.84M Operating Cash Flow (ttm): -766.15M Levered Free Cash Flow (ttm): -2.55B Total Cash (mrq): 605.56M Total Debt (mrq): 13.1B Numbers from SPWR's preliminary Q4 2024 earnings report: Preliminary Q4 Revenue: 81.1M Preliminary Q4 Profit: -5.94M Numbers I made up: Bloat Adjusted Market Cap: 253M Imperfect Form Valuation: 972M Perfect Form Valuation: 10B+ (Note: The numbers are from April and a bit outdated. I'm not going to update these numbers continuously, but I encourage you to examine up-to-date figures as part of your own due diligence. Also, cash flow and profit/loss are not the same thing so when I equate them, I do so loosely. Again, we're just trying to get a rough sense of the present and future value of the company so I'm not gonna be too much of a stickler here.) (Another Note: The bloat adjusted market cap is a rough, made up number to see the bloat effect that total debt would have on the market cap. It is derived by holding current share price constant and converting the total debt figure to shares at a strike price of $2.) For a company that's emerging from turbulent waters, SPWR's numbers are looking pretty good already. Before discussing them, it's important to keep in mind that CSLR purchased Old SunPower's assets in H2 2024 so the resulting company is a heavily retooled combination of both companies. Again, I'm referring to the pre-combination company as CSLR and the resulting company as SPWR. CSLR had a annual revenue of $40M, which roughly supports its $105M market cap. The cash and debt figures (debt-cap ratio of about 2) were reasonable as of Q3 2024. The concern for CSLR was its cash burn. With an EBITDA of -61M and operating cash flow of -40M, CSLR was spending money at an unsustainable rate into H1 2024, and its viability, given Carlyle's restrictive debt terms, was questionable. However, after TJ took over as CEO, cleaned up $70M in private equity debt, cut costs, and acquired Core Energy and Old SunPower's assets, the picture has become much more encouraging. SPWR is a phoenix risen anew from the ashes of the solar downturn. After wiping away $70M in restrictive private equity debt, the company added $80M in debt to finance the Old SunPower asset purchase and clear a financial runway to profitability. The total debt amount is notable but reasonable, given the debt-cap ratio of about 2. Based on its preliminary Q4 revenue of $81M and Q4 loss of $6M, SPWR's annual revenue and loss should project to be around $324M and $24M, respectively. It is notable that SPWR, a larger operation with 8x projected revenue, has cut its losses to more than half of what it was for CSLR. Such a dramatic improvement leads me to believe TJ when he says the company will achieve profitability this year. The company should have about $30M in cash remaining, which should be enough of a runway for 2025. Before looking at SPWR's value, it helps to compare its numbers to the largest and most well-known residential solar company, Sunrun (ticker RUN). At $1.42B, Sunrun is roughly 13x larger than SPWR by market cap. Based on revenue, Sunrun is somewhat undervalued, but it is significantly overvalued based on earnings. Perhaps, the company just had a bad run and can normalize its value going forward. Of much greater concern for Sunrun is its $13B in debt (debt-cap ratio of 9) and -$2.55B levered free cash flow, an important number in raising future funds. I'm not gonna say much more about Sunrun because there are probably people who care about that company just as much as I care about SPWR, and they know a lot more about Sunrun than me. I'll only say that a lean, disciplined SPWR can compete with anyone and is poised to grow and do very well. So what is SPWR worth? Where can it go? Based on its projected $324M annual revenue, the company's market cap should be around $972M (3x revenue). That would yield a share price of $13.17 (972 / 105.86 x 1.435). Even accounting for conversion of notes to shares (very roughly), the share price would be $5.51 (972 / 253 x 1.435). Should the share price be somewhere between $5.51 and $13.17 instead of $1.43 right now? I'd certainly be happy with that, but more realistically, as investors gain confidence through subsequent earnings reports and especially once the company reaches profitability, the share price should rise to those levels sooner rather than later. An 8x gain is exciting, but where can this company go if we look beyond that? At its pinnacle, Old SunPower was a solar sales *and* manufacturing/technology company. SPWR already manufactures most of its solar modules in the US, but if it could vertically integrate and also manufacture or develop advanced solar cell and battery technology, it would probably be a $10B+ company just as SunPower was back in the day. That would be a 94x return. If you believe this to be impossible, I'd like to point out that TJ helped Enphase achieve 300x+ growth. How can SPWR reach a $10B+ market cap? In a fantasy scenario, a mega-billionaire would want to do some good in this world and buy 10M shares of SPWR at $100 per share. That would give SPWR $1B cash to set up a factory or two, to invest in future tech, or to simply grow its existing operation. I understand charity is antithetical to capitalism, but if banks and funds survived through (government) charity after 2008, isn't a hard-working, well-meaning, American-built company like SPWR due some generosity? Other than that, I guess if enough retail investors banded together, we could help give the company a fighting chance at achieving greatness. (Note: While writing the last paragraph, I was reminded of an insurance company commercial, wherein distressed people call out for Batman but instead get Jason Bateman, dressed as the bungling Bate-man. SPWR, a noble company with noble goals, really could have benefited from an investor like Bill Gates, but unfortunately, they got Baldous instead of Bill. If only I had a banana stand....) III. THE FREEDOM Why do people amass money? Why do people pursue power? They do so because they want the freedom to do what they want, when they want, however they want. They also want that freedom for the people they care about. More than money, more than power, we all seek freedom. Unfortunately, we live in a world where most companies try to take away our freedoms and take advantage of us. Trusts and firms buy up houses to rent out to us at ever higher rates. Insurance companies would rather pay lawyers to fight us than pay us what's fair. Social media companies program computers to program us. Soon we'll be paying a premium on electric utility bills so that companies can power their AI systems. If they want to develop AI to take away our jobs and humanity, so be it, but at least don't force us into subsidizing it. Faced with losing our freedoms little by little, what can we do? Is there anything that will allow us to have a say in our future? (Update May 20: It looks like the proposed House budget bill intends to take away solar tax credits for people who own their solar systems but keep tax credits awhile longer for those who lease. No ownership for us, eh? I find it funny that more and more our self-determination is being taken away from us.) I don't mean to be depressing, but it's just the way I feel. It's also why I'm so enamored with SPWR. Among a sea of companies that do everything possible to take from us, SPWR works to provide clean, cheap energy that homeowners control. The company tries to return value to investors and perhaps give them a little bit of financial freedom. SPWR aims to help our country achieve energy independence, freeing us to engage in more noble pursuits. Some people may invest in SPWR because they want to support honest and hard-working Americans. Others may want to support clean, cheap energy endeavors. These are worthy reasons that I can get behind. For me though, the primary reason I invest in SPWR is freedom. In the interests of full disclosure, I should mention that my investment in solar has a personal aspect to it. When I was a child in the 80s, my father worked in solar technology research as a scientist. Federal funding was cut, and my father was laid off, sending our family on a strange and tumultuous journey for the next decade. Does my investment in SPWR represent some sort of psychological need to break free of the past and obtain a sense of closure? I wish I could say that's the case since my story would be more compelling. However, SPWR is just a great company I'd support even without any personal reason. I just want to invest in the right company and make some money doing it. Why do I want to make money? I just want to feel like I can breathe again and not have to worry about paying bills. If SPWR happened to go parabolic, I'd use a good chunk of the gains to fund an interesting project conceived with you in mind. If the project proceeds as planned, you'll have a choice to stay in the past or create the future. In other words, you'll have a chance to save the world. At the end of the day, I'm hoping my investment in SPWR gives me freedom that I can pay forward to you. Before I close this out, I'd like to mention something for new or inexperienced investors. As with anything worthwhile, investing takes patience and effort. Please take the time to learn how the markets work, and only risk what you can afford to lose. If you need help or advice, please seek out a financial professional. Well, that's about all I have to say about this. I hope you found this analysis interesting if not entertaining. I believe SPWR is a great company, and that's what I've focused on here. However, I think my broader point has more to do with investing in something worthy of your principles. Whatever you decide to invest in, I hope it's something you believe in, and that your investments represent the type of change you want to see happen. As they say, money is power. You have the power to create the world you want, by investing your money where you want. Stay true, invest wisely, and I'll see you on the moon. By the way, if you enjoyed this analysis, share it with the people you know and love. The process of finding this document is meant to be fun, so if you decide to share it with someone, please tell them to look for the homepage of Baldous Gates. Thanks!