SolarEdge tumbles on significantly reduced Q4 outlook

SolarEdge, a provider of string inverters, power optimizers, and energy storage, is weathering challenging conditions, with its stock price tumbling 10% to 20% of its value in the hours following its Q3, 2023 earnings report.

The company is suffering from the same macroeconomic and regulatory forces that are squeezing the residential solar industry. High interest rates and the reduction of net energy metering credit values are causing sharp declines in demand for SolarEdge and its peers. And the entry of Tesla into the string inverter market may be causing further downward pressure on the company.

SolarEdge shipped 8 GW of AC inverters and 121 MWh of batteries in-quarter.

For Q3 2023, the company posted revenues of $725 million, $676 million of which is from its solar segment. However, looking ahead to Q4, SolarEdge provided guidance of $325 million in revenues.

This has caused the stock price to crater, as SolarEdge is a high-growth stock that relies on steadily increasing revenues to push its value higher. Its major competitor Enphase similarly posted significantly depressed revenue estimates for Q4.

“The results for the third quarter fell short of our prior expectations and are reflecting a slow market environment, which has resulted in high inventory of our products in the distribution channels, in particular in Europe,” said Zvi Lando, chief executive officer, SolarEdge.

The company also posted an earnings per share of -$0.55, a negative surprise of 172% when compared to Wall Street consensus estimates. GAAP gross margins were 19.7%, and gross margins from the solar segment were 0%. The company posted an operating loss of $16.7 million in-quarter.

“While channel inventory clearing is expected to continue in coming quarters, we are optimistic about the future of the solar PV industry and are confident that our leading technology, global presence and broad product offering will enable us to continue to be a leader in this market,” said Lando.