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Why Shares of SolarEdge Technologies Plunged 16.5% Today

By Travis Hoium - May 7, 2020 at 4:13PM

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Earnings and guidance weren't quite what traders expected.

What happened

Shares of SolarEdge Technologies (SEDG -0.55%) fell as much as 16.5% on Thursday after the company announced first-quarter results. Shares were trading sharply lower all day and were still down 12.8% at 3:30 p.m. EDT.

So what

Quarterly revenue was up 59% versus a year ago to $431.2 million, but non-GAAP net income increased 54% to $50.7 million, or $0.95 per share. Analysts were expecting revenue of $420.4 million and earnings of $1.25 per share in the quarter. 

Home with large solar panels on the roof.

Image source: Getty Images.

Worse yet, management said it expects revenue to be between $305 million and $335 million in the second quarter, well below Wall Street's $348.3 million estimate. The solar business is deteriorating even more quickly than expected, and that's what's hurting the stock. 

Now what

Guidance still points to a 30% to 32% gross margin next quarter, so the company has the potential to remain slightly profitable. But the bottom line is going to take a big hit as solar installations drop across the U.S. 

As bad as the news seems today, it's a positive that SolarEdge's business is holding up as well as it is. Volume will be down, but competitors aren't eating into margins. Overt the long term, I think the company will continue to be a renewable energy industry leader.

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