SEDG - Enphase Energy: After The Dip Shares Still Too Sunny

2024-04-25 11:00:05 ET

Summary

• The rooftop solar industry is facing challenges such as higher interest rates, regulatory changes, and tariffs on foreign solar panels.
• Enphase Energy's first quarter results were disappointing, leading to a decline in share price.
• Enphase has a strong technology and has been making acquisitions to enhance its competitive position, but its high stock-based compensation expense is a concern.

Reports of my death have been greatly exaggerated - Mark Twain

Whether the quote above is a misquote or not from Mark Twain, we believe it applies well to the rooftop solar industry. It is true that the industry is facing a myriad of issues, and several smaller companies have indeed gone bankrupt. Headwinds include higher interest rates making solar system financing considerably more expensive, lobbying by utilities ( XLU ) where they have succeeded in making solar considerably less attractive in certain states, and then there is the risk of new import tariffs on foreign solar panels. At the start of the year, there was an article from Time magazine saying that the rooftop solar industry was on the verge of collapse. However, we believe that the industry has improved its offerings so much, that it will survive, even if economic and lobbying efforts slow it down....

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