Solar Energy Shares Plunge Following Enphase Energy's Demand Warning
Solar energy stocks experienced a sharp decline after Enphase Energy reported weaker-than-expected sales and profits, forecasting significantly lower revenue for the current quarter.
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Highlights
- Solar energy stocks dropped sharply after Enphase Energy missed sales and profit targets and projected current quarter revenue to fall well short of expectations.
- Enphase reported a substantial decline in sales across its key European markets and a downturn in California, the largest U.S. solar panel market.
- This announcement pushed Enphase Energy shares to their lowest level since September 2020.
On Friday, solar energy stocks took a hit following Enphase Energy's (ENPH) report of declining sales and a cautious outlook for the current quarter amid waning demand for solar equipment and battery products.
Enphase disclosed that third-quarter revenue dropped 13% to $551.1 million, missing analysts' forecasts. Earnings per share came in at $0.80, significantly below expectations.
The company attributed a 16% decline in U.S. sales to "macroeconomic conditions," while European sales plummeted 34%, citing "excess inventory among distribution partners and weakening demand in critical markets such as the Netherlands, France, and Germany."
High interest rates have adversely impacted Enphase and the broader solar industry by increasing home purchase costs and reducing the affordability of solar installations. Additionally, California, the nation's leading solar panel market, recently lowered homeowner compensation for feeding power back into the grid, diminishing solar panel appeal. CEO Badrinarayanan Kothandaraman highlighted during the earnings call that declining demand in the U.S. is primarily driven by California.
Enphase now anticipates current quarter revenue between $300 million and $350 million, far below analyst expectations that were nearly double.
Following the announcement, Enphase Energy shares fell 15% on Friday, closing at $82.09, their lowest price in over three years. Other solar companies also faced losses: Solaredge Technologies (SED) dropped 7.7%, First Solar (FSLR) declined 5.2%, and Sunrun (RUN) fell 9%.
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