Energy
Wednesday, February 21st, 2024 3:40 pm EDT
Key Points
- SolarEdge’s stock experienced a significant decline following the company’s announcement of weak guidance for the first quarter, attributed to ongoing challenges in the residential solar market due to high interest rates and diminished demand.
- The company projected revenues between $175 million and $215 million for Q1 2024, well below Wall Street’s expectations of $406 million, resulting in a substantial drop in SolarEdge shares by up to 23% in extended trading.
- SolarEdge’s performance in Q4, including an adjusted loss per share of 92 cents and revenues of $316 million, down 65% from the same period in 2022, was influenced by market dynamics and inventory levels. CEO Zvi Lando acknowledged the struggles stemming from high interest rates and declining prices, leading to inventory buildup, and outlined plans to address these challenges, including slashing 16% of the workforce and closing some manufacturing sites to reduce costs amidst weakening revenue.
SolarEdge’s stock faced a significant downturn following the company’s announcement of weak guidance for the first quarter of 2024, attributing the challenges to ongoing difficulties in the residential solar market influenced by high interest rates and reduced demand. The company projected revenues between $175 million and $215 million for the initial three months of 2024, a substantial deviation from Wall Street’s anticipated $406 million. Consequently, SolarEdge shares plummeted by up to 23% in extended trading. In the fourth quarter, SolarEdge’s performance compared with Wall Street expectations revealed an adjusted loss per share of 92 cents, surpassing the anticipated $1.17 loss, while its revenues stood at $316 million, below the expected $354 million. On a GAAP basis, SolarEdge reported a net loss of $162.4 million for Q4, marking a sharp decline from the net profit of $20.8 million in the corresponding period of 2022. CEO Zvi Lando attributed the company’s challenges to a weaker market in the latter half of 2023, driven by high interest rates and declining prices, leading to inventory buildup. SolarEdge, known for manufacturing inverters converting solar power into electricity, addressed the hurdles during its earnings call, acknowledging the adverse effects of inventory overhang due to demand slowdown. Lando expressed optimism about the European residential solar market bottoming in Q1 and subsequent improvements, but a recovery in the U.S. market is contingent on interest rate reductions. Additionally, the CEO disclosed that the inventory backlog is not expected to dissipate until the end of 2024, prompting the company to implement cost-cutting measures, including workforce reduction by 16%, closure of manufacturing facilities, and discontinuation of certain businesses to mitigate the impact of declining revenue.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/20/solaredge-tumbles-18percent-on-weak-first-quarter-guidance.html
