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  "docId": "019dd923-622c-750b-8b97-4517b3b2214e",
  "docSlug": "00da6c52307d",
  "documentTitle": "Sunrun Inc. (RUN)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "presentationDate": "2022-07-28 00:00:00",
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  "notes": "The slide argues that Sunrun's reported costs are inflated, leading to an overstated Fair Market Value (FMV) for tax purposes.",
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      "text": "Accordingly, we estimate that RUN’s Cost Approach FMV is overstated by 25.7%.",
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      "text": "Removing Construction in Progress from the completed system cost reduces RUN's Q1 2022 Creation Costs by $.19 / watt.\nRemoving P&L Costs not available for tax basis purposes reduces RUN's Q1 2022 Creation Costs by $.34 / watt.\nRemoving Profit from Acquired Third-Party Systems reduces RUN's Q1 2022 Creation Costs by $.16 / watt.\nReducing RUN's Developer Margin from what we understand is 20% to 15% reduces RUN's Q1 2022 estimated Cost Approach valuation by $.31/watt.",
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      "text": "Cost Approach FMV: 25.7%",
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      "kind": "paragraph",
      "text": "Note that RUN is selling these assets to homeowners for $3.38 per watt in Q1 2022 (its most recent quarterly report) while claiming that its costs to create that asset are $4.11 per watt. In our opinion, RUN has little interest in selling systems for $3.38 per watt, but that is the market price.",
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      "text": "Adjusting for the above costs that we believe are prohibited yields an adjusted Cost Approach valuation of $3.93 / watt. Even this could be generous. RUN's cost structure seems to be significantly higher than the industry as a whole.",
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      "text": "34 The appraisals we reviewed had developer margins ranging from 15% to 20%. We believe a 15% margin is appropriate, and we assumed that RUN uses 20% as a developer margin.",
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      "text": "Bridge table showing adjustments from reported costs to adjusted FMV, resulting in a 25.7% overstatement.",
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      "kind": "title",
      "text": "Adjusting RUN's Cost Approach Tax Model to $3.93 / Watt",
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