Enphase Energy, Leading Provider of Microinverter-Based Solar-Plus-Storage Systems, Inspires Investor Cheer Despite Declining Revenues and Profits. This is Due Largely to the Optimistic Statements of CEO Badri Kothandaraman.
The business report presented yesterday for the fourth quarter of 2023 led to price fluctuations on the NASDAQ. The company achieved a profit of 20.919 million US dollars or 0.15 US dollars per share. Adjusted for one-time factors, the profit was 0.54 US dollars per share, which met analysts' expectations but was significantly below the previous year's quarter of 153.953 million US dollars or 1.06 US dollars per share.
Revenue also fell to $305.57 million, 58 percent lower than in the same period of the previous year ($724.652 million). FactSet analyses had expected revenue of $328 million. Particularly in Europe, there were significant revenue losses, which Enphase Energy attributes to supply reductions due to increasing inventory levels at distribution partners.
A news agency reports that the solar industry in Europe is currently struggling with high inventory levels and declining sales. The situation in the USA does not look good either: In California, the feed-in tariff for excess electricity from solar installations was reduced, which led to a decrease in demand. High interest rates on loans also contribute to the weakness of the US market.
Despite these challenges, Badri Kothandaraman remains confident: "We have overcome the softening of demand. We believe that the first quarter could be the trough. In Europe, the first signs of recovery are already emerging, and we expect the non-Californian states to rebound quickly," the news agency quotes the CEO of Enphase.
For the first quarter of 2024, the company anticipates a seasonal decline in demand of 10 percent. Revenues between 260 and 300 million US dollars are expected, which is below the result of the fourth quarter. This forecast includes deliveries of 70 to 90 megawatt-hours.
The stock market responded positively to the news, despite both the previous quarter's figures and the analysts' expectations being underperformed. The stock closed up 2.77 percent at 100.51 US dollars after Tuesday's session on the NASDAQ.
In pre-market trading on Wednesday, it temporarily rose by another 12.46 percent to 113.03 US dollars. According to analyst Jordan Levy of Truist Securities, investors reacted positively as the figures were "good enough" and they received the signal that Enphase is on the right track.
Despite recent share price gains, the solar stock still has a long way to go: Over the past twelve months, it has suffered losses of 54.08 percent, and since the beginning of the year, it has declined by 23.94 percent.
