Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of inverter manufacturer Enphase Energy Inc (NASDAQ:ENPH) dropped as much as 14% today after the company reported underwhelming first-quarter earnings.
So what: Revenue jumped 50% from a year ago to $86.7 million on 162 MW of microinverters sold. Net loss for the quarter was $6.3 million, or $0.14 per share, up just slightly from a year ago. On an adjusted basis, the loss was $0.07 per share, a penny better than estimates. Management said that revenue for the second quarter would be $100 million to $105 million, toward the low end of analysts' $104 million estimate.
Now what: The quarter's results may have topped estimates, but there were much higher expectations from investors hoping for a big impact from battery storage or a booming solar market. Instead, losses continued and there are more questions than answers about whether or not Enphase Energy can ever be a big player in energy storage, or even be a profitable inverter supplier.
Unless Enphase Energy makes its way into a business where it can maintain a sustainable competitive advantage and a high margin, I don't see a reason to buy the stock. There's a lot of potential there, but as a supplier of a middling component in a solar power system, I don't see how Enphase Energy becomes the big value-adder that investors once hoped it could be.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.