Sunnova sees profitability ahead of its IPO

In mid-June, there were rumours that residential solar unicorn Sunnova planned to IPO. On June 27th, the company confirmed the rumors by submitting a pre-IPO prospectus to the SEC, reports therising.co.
As Sunnova becomes the first residential solar company to IPO in years, investor interest is piqued. But as the space tapers off, the company's future is unclear.
Major roadblocks could bar the company from both a successful IPO and in the long run, growth opportunities that its competitors took advantage of in different times.
At the same time, Sunnova's (relatively) unique business model may help it overcome its challenges. Either way, investors should pay attention to the company as it approaches its initial public offering.
As Sunnova continues its mission to bring ubiquity to residential solar, what it needs is geographic diversity. That is, it needs consumers from at least around the United States to truly make residential solar more popular.
Currently, over half of its installations are in California and New Jersey, serving 26% and 29% of its units to the respective states. An additional 14% of its installations have been made in Puerto Rico.
Though an interesting choice granted Puerto Rico ups its renewable energy efforts, the territory makes it true that over two-thirds of Sunnova's installations have been done in just three regions.
Hence, it's no surprise that Sunnova has only penetrated 3% of the national residential solar market. State-specifically, the company has reached 15% of the California market and 5% of the New Jersey market.
But Sunnova's lack of diversity isn't just geographic; it does over half of its installations with one installer, namely Trinity Solar. Though these issues are widely considered pain-points for Sunnova, the company believes they corroborate its high growth potential. The question is, how fast can Sunnova reach a critical mass of customers nationally before its prime competitor, Sunrun, eclipses it entirely.
Beyond its geographical and installation diversity qualms, Sunnova has a more fundamental problem common to unicorn companies these days: it isn't profitable. For at least 9 of the last 10 quarters, the company has reported operating losses ahead of its IPO.
Though its cash woes are a cause for concern, Sunrun's economic situation isn't unique to the solar industry either. And it's not the end all be all either. Actually, it's quite common for companies in the space to reinvest earnings in growth in lieu of immediate profitability.