Sunrun RUN
Muddy Waters rebuts Sunrun's response: the 90% PPA-renewal assumption on 20-year-old panels is fantasy, the $668M panel-removal liability is real, and RUN hides its tax basis.
Thesis
Muddy Waters' two-page follow-up skewers Sunrun's 'consultant-advised' rebuttal of an earlier short report as long on verbiage and short on substance. Carson Block focuses on two arguments RUN still cannot defend. First, on earning assets: RUN's Investor Model assumes 90% of customers will renew 20-year-old solar systems at PPA expiry, even as RUN itself concedes PV efficiency is advancing rapidly — a collision the company papers over while continuing to ignore a panel-removal obligation Muddy Waters values at $668 million present value. Second, on tax basis: RUN hides behind 'best practice' rhetoric and 'they do it too' defences without ever disclosing the weighted-average per-watt tax basis its SPVs have claimed since 2018 or the aggregate tax benefits tax-equity investors have pulled out, the two questions that would settle whether Sunrun is inflating investment tax credits.
SCQA
Sunrun is a residential solar PV leasing operator whose reported earning-asset value and investment tax credits are central to its equity story; Muddy Waters has a short position and previously flagged both as overstated.
RUN's rebuttal dodges the substance: it still assumes a 90% PPA-renewal rate on 20-year-old panels, denies the panel-removal liability Muddy Waters pegs at $668M present value, and refuses to disclose its per-watt tax basis.
Muddy Waters presses Sunrun to disclose the weighted-average per-watt tax basis its SPVs have claimed each year since 2018 and the aggregate tax benefits its tax-equity investors have claimed over the same period.
No explicit price target is offered here; the implicit payoff is that honest disclosure would force down-revisions in earning-asset value (panel-removal alone a $668M PV hit) and validate Muddy Waters' short thesis.
The three reasons
- 1
A 90% PPA-renewal rate on 20-year-old panels is implausible given rapid PV efficiency gains
- 2
Panel-removal obligation is a real liability, estimated at $668M present value
- 3
RUN still refuses to disclose per-watt tax basis or aggregate tax-equity benefits since 2018
Primary demands
- Disclose the weighted-average per-watt tax basis RUN's SPVs have claimed each year since 2018
- Disclose aggregate tax benefits claimed by RUN's tax-equity investors since 2018
- Book a realistic panel-removal liability (Muddy Waters estimates $668M present value)
- Lower the 90% PPA-renewal assumption embedded in the Investor Model
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (1)
Notes
Short follow-up note (1 page of terms of use + 1 page of substance) responding to Sunrun's rebuttal of an earlier Muddy Waters short report. No charts or visuals — Word-style memo under the Muddy Waters Capital header. Tone is sharply sarcastic ('middle school strategy of But they do it too!', '10-story vs 20-story building' analogy). Invokes Income Approach / Cost Approach and Section 48 tax code critique but does not execute a valuation. No individual CEO or director named as villain; critique is aimed at 'RUN' the entity and its 'consultant-advised' response. Short position disclosed generically in boilerplate but no stake percent given.