Enphase Energy shares extended their decline on Thursday, touching an all-time low of $25.80 following the release of the company's third-quarter earnings. The stock has now fallen roughly 60% from its 52-week high, with the company's market capitalization shrinking from $9.5 billion to $3.9 billion. At its peak, the solar technology firm was valued at over $43 billion.
Weak quarterly results and guidance
The company, known for its solar microinverters, battery storage systems, and EV chargers, reported revenue of $293 million for the third quarter, down from $410 million in the same period last year. This marks a continuation of a downward trend, with management attributing the decline to weakness in the U.S. residential solar market and an 11% drop in European revenue.
CEO Badri Kothandaraman said in a statement: "Our core U.S. residential solar market continues to face headwinds from higher interest rates and the expiration of the Section 25D federal tax credit. We are addressing these near-term challenges while positioning Enphase for a new phase of growth."
Profitability also deteriorated. Net income fell to $23.3 million in Q3, down from $66 million a year earlier and $36 million in the second quarter, signaling accelerating pressure on the business.
Looking ahead, Enphase guided fourth-quarter revenue in the range of $225 million to $255 million, significantly below the $300 million analysts had anticipated. The shortfall has intensified bearish sentiment, with short interest currently at 22% of the float.
Analyst reactions and price target cuts
Several Wall Street firms have lowered their outlooks on the stock. Deutsche Bank initiated a sell rating, citing concerns that the company's safe harbor revenue expectations may be overly optimistic. Safe harbor revenue refers to sales to customers who plan to install the equipment over a period longer than one year.
Other adjustments include GLJ Research cutting its price target from $24.40 to $21.40, BMO Capital Markets reducing from $37 to $28, JPMorgan lowering from $40 to $35, and Morgan Stanley trimming from $27 to $24.
Technical breakdown and support levels
From a technical perspective, Enphase shares have broken below key support at $29.76, the April low. The stock remains beneath its 50-day moving average and the Ichimoku cloud, while the Relative Strength Index continues to trend lower, suggesting further downside potential.
Analysts see the next support level around $20, though a move back above $30 would invalidate the current bearish setup.
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