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Why Enphase Energy's Shares Dropped 8.2% on Thursday

By Travis Hoium - Feb 25, 2021 at 5:08PM

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A big bond offering isn't helping Enphase Energy's shares today.

What happened 

Shares of solar supplier Enphase Energy (ENPH -1.14%) plunged as much as 8.2% in trading on Thursday after the company announced a larger debt offering. Shares closed the day down 7.5%. 

So what

Yesterday, Enphase Energy announced a $1 billion green bonds offering, which was intended to be $500 million of 2026 and 2028 convertible senior notes. Today, that offering was increased to $1.15 billion with an equal amount in 0% Convertible Senior Notes due 2026 and 0% Convertible Senior Notes due 2028. The pricing of the offering is expected to generate about $1.132 billion before any overallotment.

Home with solar panels on the roof.

Image source: Getty Images.

The initial conversion rate for the bonds would be $307.47 per share for the 2026 notes and $284.87 per share for the 2028 notes. That's a solid premium from where shares trade today. 

Now what

Enphase is raising a significant amount of cash that won't bring with it regular interest payments and will only dilute shareholders if the stock jumps over the next few years. I don't think that's a reason to be concerned, and if management can generate a solid return from this offering it will be a great move. But traders saw a higher offering and the overall drop in solar energy stocks today as a reason to sell off Enphase Energy shares. 

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Enphase Energy, Inc. Stock Quote
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