What Happened?
Shares of home energy technology company Enphase (NASDAQ: ENPH) jumped 13% in the afternoon session after the solar sector received a boost from indications that U.S. lawmakers are considering preserving tax credits for rooftop solar.
Enphase was the top-performing stock in the S&P 500 on the news. The stock had lost about half its value in the past six months, partly on fears that the removal of federal incentives would stunt demand.
However, reports that a key Republican senator mentioned that the Senate's version of a budget bill could include "a little more generous" clean energy credits than expected has reversed some of that negative sentiment.
While the final details of the legislation are still being negotiated, the positive shift in tone from Washington has been enough to reignite investor confidence in the sector's outlook.
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What The Market Is Telling Us
Enphase’s shares are extremely volatile and have had 48 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 9 days ago when the stock dropped 27.5% on the news that a U.S. Senate panel proposed phasing out solar and wind energy tax credits by 2028, raising concerns about future profitability and project viability for solar companies. The phasing out is expected to start as early as 2026, diminishing the financial incentives that have been critical drivers of growth in the renewable energy sector.
Enphase is down 39.9% since the beginning of the year, and at $42.90 per share, it is trading 65.3% below its 52-week high of $123.65 from August 2024. Investors who bought $1,000 worth of Enphase’s shares 5 years ago would now be looking at an investment worth $947.04.
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