Solar Power Stocks Sink as Enphase Energy Warns About Falling Demand

Solar energy stocks were rocked Friday after Enphase Energy (ENPH) reported sales slumped and warned about the current quarter as demand for its solar equipment and batteries dropped.

Enphase Energy said third-quarter revenue sank 13% to $551.1 million, short of forecasts. Earnings per share came in at $0.80, well below analysts’ estimates.

The company said that sales in the U.S. were down 16% because of “macroeconomic conditions.” They plunged 34% in Europe, which it blamed on “high inventory at our distribution partners along with a softening in demand in our key markets – the Netherlands, France, and Germany.”

Enphase Energy and others in the industry have been negatively affected by high interest rates, which have raised the costs of home purchases and made adding solar projects less affordable. In addition, California, the top U.S. market for solar panels, recently revised downward the amount homeowners are reimbursed for feeding power into the electric grid, reducing the panels’ attractiveness. CEO Badrinarayanan Kothandaraman noted during the company’s earnings call that the falling demand in the U.S. is being led by California.  

Enphase Energy now predicts current quarter revenue will be in a range of $300 million to $350 million. Analysts had been anticipating as much as double that amount.  

Enphase Energy shares fell 15% on Friday to close at $82.09, their lowest point in more than three years. Among other solar energy companies to lose ground on Friday, Solaredge Technologies (SED) fell 7.7%, First Solar (FSLR) dropped 5.2% and Sunrun (RUN) was off 9%.