What happened 

Shares of SolarEdge Technologies (SEDG -0.75%) plunged as much as 17.9% in trading on Monday, as the entire market had one of its worst days ever. At the close of trading, shares were down 16.3%. 

So what

There's no question that the overall drop in the market was the main cause of SolarEdge's fall. But solar companies are being affected by macro trading trends as well. Oil fell 25% today, and the fortunes of the solar industry are often perceived to be tied to oil. Higher oil prices make people think about buying an electric vehicle or putting solar panels on their home, and the opposite is what we saw today. 

Roof with large solar system.

Image source: Getty Images.

The reality is that solar energy isn't correlated with oil prices at all, especially in the residential market that SolarEdge serves. In fact, if the economy takes a turn for the worst, homeowners may look for ways to save a few dollars a month. Solar can help do that. 

Now what

I wouldn't be worried about SolarEdge's business in the long term after today's drop, but it's hard to argue that this renewable-energy stock is a great value. Shares trade at nearly 39 times trailing earnings and nearly 4 times sales. That's expensive for a manufacturing company in the competitive solar market. But if the stock continues to fall and the price-to-earnings ratio comes down to a more reasonable level, it'll make shares much more compelling to long-term investors.