What happened 

Shares of solar industry supplier SolarEdge Technologies Inc. (SEDG 5.82%) fell as much as 12.5% in trading Friday after reporting third-quarter results. At 2:40 p.m. EDT, shares were still down 8.5% on the day.

So what

By almost any measure, last quarter was very impressive for SolarEdge. Revenue was up 42% to $236.6 million, and net income jumped from $28.0 million a year ago to $45.6 million. On a non-GAAP basis, which pulls out one-time items, earnings were $0.86 per share, beating estimates by four cents. 

Home with a large solar installation.

Image source: Getty Images.

Guidance also looked strong, with management expecting $245 million to $255 million in revenue and a GAAP gross margin of 30% to 32%, down from 33% in the third quarter. 

Now what

Sometimes stocks react strangely to good earnings reports, and that's what I'm seeing with SolarEdge. The company beat estimates and showed strong growth on the top and bottom lines, but that still wasn't enough for investors. I think the concern today is the possibility that margins are steadily shrinking, which will eventually result in lower profitability. But the reaction today seems to be overdone, and I see today's dip as a great buying opportunity for long-term investors.