Shares of solar energy stock SolarEdge (NASDAQ:SEDG) closed Thursday trading down 9.8%, and its peer, solar inverter-maker Enphase Energy (NASDAQ:ENPH), declined a similar 10.2%. The reason: Both stocks were targeted in a short report from Citron Research today.
In the course of talking up the prospects of yet a third stock -- Waukesha, Wisconsin-based power-generation equipment producer Generac Holdings (NYSE:GNRC) -- noted short-seller Citron explained how Generac "is a major new competitive entrant" in the field of solar inverters.
Far from considering the company's newness to this market a disadvantage, however, Citron argued that "Generac ... has taken No. 1 market share in every market it enters." The implication is that it will similarly take over the market for solar inverters with ease. (Solar inverters are devices that convert direct current energy from solar arrays into alternating current electricity used by consumers).
Generac, says Citron, "has the resources and track record to make a huge dent in both SEDG and ENPH's market shares, but given that the company is followed by zero solar analysts, GNRC's commercial launch that was announced last week has gone completely unnoticed."
Once Generac begins taking share, however, Citron predicts that SolarEdge stock will quickly tumble 33% to 34% in price to as low as $51 per share, while Enphase stock will sink 70% to 75%, falling to just $6 or $7 a share over the next six to 18 months.
No wonder investors are spooked!