Solar power stocks took a sharp hit in after-hours trading on Thursday following a concerning announcement from solar-equipment manufacturer, SolarEdge Technologies. The company revealed a significant slump in demand for solar products in Europe.
SolarEdge stock (ticker: SEDG) plummeted by 20%, while competitor Enphase Energy (ENPH) experienced a 14% decrease. Solar developers Sunrun (RUN) and SunPower (SPWR) also took a hit, down 7% and 6% respectively.
SolarEdge CEO, Zvi Lando, stated in a release, “During the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and pushouts of existing backlog from our European distributors.” Although the company’s full third-quarter earnings report will be released on Nov. 1, the severity of its issues prompted an earlier warning to shareholders.
Rooftop solar stocks have faced challenges in recent months, with diminishing U.S. demand due to high interest rates and less favorable state solar policies.
SolarEdge specializes in manufacturing inverters that convert direct current from solar panels into alternating current usable in homes. However, the company adjusted its guidance for third-quarter revenue to a range of $720 million to $730 million, down from the previous forecast of $880 million to $920 million. Analysts had anticipated $909 million in revenue.
Projected operating income also underwent a downward revision, now anticipated to fall between $12 million and $31 million, compared to the original estimate of $115 million to $135 million.
While solar installations typically experience upticks in late summer and September across Europe, this year has seen a departure from this trend with no signs of improvement in the near future.
“Additionally, the Company anticipates significantly lower revenues in the fourth quarter of 2023 as the inventory destocking process continues,” SolarEdge added.
The industry will be closely watching the upcoming third-quarter earnings report to gauge the full impact of SolarEdge’s struggles.
