What Happened?
Shares of home energy technology company Enphase (NASDAQ: ENPH) fell 14.6% in the afternoon session after the company provided a weak sales forecast for the fourth quarter and a downbeat outlook for early 2026.
While third-quarter revenue of $410.4 million came in ahead of estimates, investors focused on the company's disappointing outlook. Enphase projected fourth-quarter revenue to be between $310 million and $350 million, which fell significantly short of analysts' expectations of $374.4 million. Management pointed to weaker demand, especially in Europe, as a key reason for the lower forecast, noting European revenue had already declined 38% from the previous quarter. Compounding the issue, the company also warned of a "larger-than-normal seasonal decline" in revenue for the first quarter of 2026. This anticipated drop was linked to the expiration of a tax credit, which management called a "near-term headwind." The weak guidance overshadowed the third-quarter beat, driving the negative reaction from investors.
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What Is The Market Telling Us
Enphase’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. But moves this big are rare even for Enphase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 2.9% on the news that the company announced an expansion of its virtual power plant (VPP) support across Europe, introducing new features for grid management and energy optimization. The expansion included new capabilities like one-minute real-time data streaming, remote system maintenance, and home solar curtailment, which allows for pausing solar production during periods of excess generation. The platform also integrated control of heat pumps and electric vehicle chargers. Enphase noted that its participating system deployments in Europe grew by more than tenfold over the previous year, with thousands of homes in countries like the Netherlands, Germany, and the UK now connected. In a related development, Jefferies raised its price target on the stock to $41 from $36, citing an improving outlook for the residential solar industry.
Enphase is down 55.5% since the beginning of the year, and at $31.77 per share, it is trading 64.7% below its 52-week high of $89.94 from November 2024. Investors who bought $1,000 worth of Enphase’s shares 5 years ago would now be looking at an investment worth $309.92.
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