Solar panels at the ENGIE Sun Valley Solar project in Hill County, Texas, on March 1, 2023.
Mark Felix | AFP | Getty Images
Solar stocks plunged on Friday following a warning from solar product manufacturer SolarEdge that demand in Europe has significantly weakened. This further battered sentiment on the renewable energy sector, which has already faced challenges throughout the year.
The Invesco Solar ETF (TAN) dropped 8.5% before the opening bell and is set to open the trading session at $42.60, its lowest level since July 2020.
Shares of SolarEdge plummeted nearly 28% in early trading after reporting lower-than-expected revenue, gross margins, and operating income in the third quarter. The company also anticipates significantly lower revenue in the fourth quarter.
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Solaredge, 1-day
The solar sector has faced challenges this year due to rising interest rates negatively impacting the financing environment for U.S. solar installations. Year-to-date, SolarEdge is down 59.7% and the TAN ETF is down 35.9% as of Thursday’s close.
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Invesco Solar ETF (TAN)
Goldman Sachs downgraded SolarEdge to neutral from buy on Friday. The firm expressed concerns about the weak demand environment in Europe, which poses significant questions for the company in the coming years. This issue extends beyond seasonality.
Analyst Brian Lee mentioned in a note, “After a second straight disappointing quarter of results/guidance, we find it hard to defend the stock: we underestimated the effects of ongoing inventory, end market demand, and now margin issues that are likely to serve as headwinds for the stock for the foreseeable future given what appears to be a significant deterioration in visibility.”
—CNBC’s Michael Bloom contributed to this report.
