Shiri Habib-Valdhorn
22 Oct, 2023 16:41
Synopsis
SolarEdge Technologies, an Israeli solar energy company, experienced a sharp decline in its share price and market cap following disappointing preliminary third quarter results, including a profit warning. The company's revenue is expected to be significantly lower than forecasted, reflecting a shift to negative growth. SolarEdge attributed the decline to unexpected cancellations and pushouts of backlog, higher inventory, and slower installation rates. The company's CEO highlighted slower installation rates at the end of the summer and in September, contrary to the usual trend. The third quarter results will be published on November 1.
The Israeli solar energy company had more than $1 billion wiped off its market cap after publishing disappointing preliminary third quarter results.
Israeli solar energy company SolarEdge Technologies (Nasdaq: SEDG) saw its share price fall below $100 on Friday, only two months after it fell below $200. At its peak two years ago the share price was $368, reflecting a market cap of $20 billion. On Friday, the share price fell 27.27% to $82.90, giving a market cap of $4.689 billion, down over 75% from its peak.
SolarEdge develops and markets solar inverters for photovoltaic arrays and other energy generation and storage products.
The sharp fall in the company's share price follows publication of preliminary financial results for the third quarter, which included a profit warning for the third quarter. It seems that the problems reflected in SolarEdge's second quarter results are continuing in the current quarter and looking ahead.
The company said that third quarter revenue would amount to $720-730 million compared with the previous forecast of $880-920 million. Even the previous forecast was received with disappointment when it was issued in August because analysts had expected the company to report revenue of over $1 billion in the third quarter.
Moving to negative growth
The significance of $720-730 million revenue is that SolarEdge has moved to negative growth after investors were used to positive and even double-digit percentage growth for many years. The third quarter will end with a fall of 13% in revenue compared with the corresponding quarter of 2022 and a fall of 27% compared with the preceding quarter.
Furthermore, non-GAAP gross margin* is now expected to be within the range of 20.1% to 21.1%, compared with the previous expectation of 28% to 31%. GAAP operating loss is now expected to be within the range of $9 million to $28 million. Non-GAAP operating income is now expected to be within the range of $12 million to $31 million, compared to the previous expectation of $115 million to $135 million.
SolarEdge CEO Zvi Lando said, "During the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and pushouts of existing backlog from our European distributors. We attribute these cancellations and pushouts to higher than expected inventory in the channels and slower than expected installation rates. In particular, installation rates for the third quarter were much slower at the end of the summer and in September where traditionally there is a rise in installation rates."
SolarEdge will publish its third quarter results on November 1.
Source: https://en.globes.co.il/
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