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Why Enphase Stock Dropped 7% This Morning

By Rich Smith – Jun 25, 2020 at 2:02PM

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And why Enphase has already made most of that loss back.

What happened

With the S&P 500 poised to open lower, shares of solar microinverter-maker Enphase Energy (ENPH -0.24%) quickly plunged into the red Thursday morning. But then a miracle happened -- Enphase shares turned around, and pared their loss to just 2.7% in afternoon trading (12:55 p.m. EDT).

So what

Why the drop, and why the reversal? Chances are the initial decline can be chalked up simply to investors "taking profits" after a strong five-day, 20% run.

The June 17 short report from Prescience Point Capital Management targeting Enphase sparked a chorus of endorsements for the stock on Wall Street. And in response to those endorsements, investors flocked back to buy shares of Enphase. Yesterday's sell-off on the Nasdaq may have spooked momentum traders, however, and prepared them to exit Enphase stock this morning.

Woman in a hard hat is holding a solar panel.

Can Enphase interest you in a new solar module, perhaps? Image source: Getty Images.

Now what

And yet, investor panic was short-lived. By noon Thursday, investor attention was already turning to new news -- to wit, Enphase's announcement this morning that it is teaming up with Hanwha Q Cells  (HQCL) in Germany to build a new kind of solar module.  

Dubbed the Enphase Energized Q CELLS AC Module, this new solar power unit will be "based on seventh-generation Enphase IQ microinverters" and is said to be about 19.5% efficient in converting sunlight into usable electricity. (According to tech authorities, average efficiency among most solar panels on the market today ranges from 15% to 17% ).  

In addition to superior efficiency, the new product is said to guarantee "85% [of] initial performance in the 25th year" of use -- and will be backed by a "25-year module warranty" to boot, virtually ensuring that most solar users will recover their installation cost.

Good news for Enphase? I think so -- and the market seems to be coming around to that same conclusion.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
$256.84 (-0.24%) $0.61
Hanwha Q CELLS Co., Ltd Stock Quote
Hanwha Q CELLS Co., Ltd

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