What Happened?
Shares of solar energy systems company Shoals (NASDAQ: SHLS) jumped 14.9% in the afternoon session after the company reported strong first quarter 2025 results which beat analysts' revenue and EBITDA expectations. In addition, next quarter revenue guidance and full-year EBITDA guidance topped Wall Street's estimates. The size of its future work pipeline, orders in hand, grew 5% to $645 million, most of which is set to turn into sales soon. Revenue did fall from the previous year, mainly due to changes in pricing and the type of products sold, but that shortfall was less important than the outlook. Overall, we think this was a solid quarter with some key areas of upside.
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What The Market Is Telling Us
Shoals’s shares are extremely volatile and have had 54 moves greater than 5% over the last year. But moves this big are rare even for Shoals and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 26 days ago when the stock dropped 12.2% as stocks gave back some of the gains from the previous day as the White House clarified the tariffs on imports from China would add up to 145%, while the baseline 10% tariffs remained in place for all countries. This reminded markets that the global trade environment remained volatile, limiting the potential for sustained gains. Also, President Trump said he was willing to accept pain in the short term, and was aware his policies could cause a recession, but he remained more mindful of a more severe case of economic depression (higher unemployment and prolonged downturn).
For investors, this suggested that the administration could prioritize long-term structural shifts over near-term economic stability, further increasing policy-driven risk in the markets.
Shoals is down 27.9% since the beginning of the year, and at $4.36 per share, it is trading 50.7% below its 52-week high of $8.85 from May 2024. Investors who bought $1,000 worth of Shoals’s shares at the IPO in January 2021 would now be looking at an investment worth $140.74.
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