SolarEdge (SEDG) predicts tough road ahead: a deep dive into their latest earnings fallout

SolarEdge Technologies, a key player in the solar PV inverter market, recently disclosed its Q4 earnings, revealing a loss of $0.92 per share, which surprisingly outperformed the expected $1.34 loss per FactSet Consensus. Yet, the company's quarterly revenue plunged by 64.5% year-over-year to $316.04 million, missing the anticipated $323.24 million.

Looking forward, SolarEdge has set a cautious Q1 revenue forecast between $175 million and $215 million, starkly below the expected $373.78 million. The firm anticipates shipping below end market demand by around $200 million in Q4 and foresees this gap widening to $250-300 million in Q1. Optimistically, it projects a demand rebound in Q2-Q3, aligned with seasonal trends.

2023 was a year of contrasts for SolarEdge, with a booming first half followed by a significant drop in demand in the latter half, attributed to rising interest rates and falling power prices. This demand dip led to an inventory surplus, delaying shipments. The company remains cautious about the US residential market, anticipating no major shifts until a decrease in interest rates.

Contrasting its outlook with Enphase Energy (ENPH), SolarEdge's projections are more pessimistic, anticipating a longer duration for market normalization. This outlook difference has triggered a downturn in solar stock values, affecting Enphase Energy, Maxeon Solar Technologies, SunPower, Canadian Solar, First Solar, and JinkoSolar.

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