Enphase Stock Slumps After Q1 Earnings Disappoint Amid Soft US Solar Demand

Enphase Energy (ENPH) released quarterly earnings and sales that missed analysts’ forecasts and issued a downbeat current-quarter sales outlook amid ongoing softness in the U.S. solar energy market, sending its shares tumbling more than 8% in premarket trading Wednesday morning.

For the three month period ending March 31, the maker of microinverter-based solar energy solutions reported adjusted earnings of 35 cents per share on revenue of $263 million, missing estimates of 41 cents a share in earnings on sales of $276 million.

The Fremont, California-based company said softening demand in the U.S. solar market, along with seasonality factors and a reduction in shipping, pressured the top line during the quarter. Geographically, the company’s U.S. revenue fell 34% in the period on a sequential basis, while sales in its European business grew 70%.

“The decline in revenue for the first quarter of 2024 compared to the fourth quarter of 2023 was the result of seasonality and a further softening in U.S. demand, while we continued to reduce shipments to manage channel inventory,” the company said in its earnings statement late Tuesday.

Turning attention to the current quarter, Enphase guided sales of between $290 million and $330 million, with the upper end of that forecast falling well short of $347 million Street view.

In December last year, the company unveiled plans to slash 10% of its workforce and reduce its manufacturing capacity to combat sluggish consumer demand and clear through a backlog of inventory. In February, Enphase said it expects to see an improvement in both of these areas by the end of the second quarter.

Since bottoming out in early November last year, Enphase shares traded within a symmetrical triangle before breaking down from the pattern earlier this month. During today’s expected earnings-related weakness, investors should earmark last week’s low at $105.61 as a key area of interest on the chart. A close below this closely watched level would create a lower low and potentially see the stock’s longer-term downtrend continue. 

Enphase shares were down 8.4% at $104.00 at around 7:45 a.m. ET. Through Tuesday’s closing bell, the stock had lost about half of its value over the past 12 months.

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As of the date this article was written, the author does not own any of the above securities.