What happened 

Shares of SolarEdge Technologies (SEDG 3.69%) fell by as much as 20% in trading on Wednesday after the company released its second-quarter results. Shares were still down by 17.4% at 3:00 p.m. ET, and showed no signs of recovering. 

So what 

The solar energy company's revenue rose from $727.8 million a year ago to $991.3 million. Its non-GAAP gross margin was 32.7%, up from 27.3% a year ago, and its non-GAAP operating income was $191.0 million. It booked a cash-flow-from-operations loss of $88.7 million, due in part to a $110 million increase in inventory.

For the third quarter, management expects revenues in the range of $880 million to $920 million with a non-GAAP gross margin of 28% to 31% and non-GAAP operating income of $115 million to $135 million. 

Now what 

We have seen weak results in residential solar across the board this quarter, and this is a continuation of that trend. What's most shocking is how quickly margins and operating income are eroding. 

What investors now have to worry about is further pressure on prices. Solar installers are facing pricing pressure because of higher interest rates and lower costs for electricity from competing sources. That's a trend that may not end anytime soon, and would worry me as an investor. 

SolarEdge's shares are still trading for 38 times earnings, which is expensive for a company with earnings that are trending lower. That's why I'm not a buyer of this stock after the release of its second-quarter results.