Enphase Energy stock analysis: product demand is evaporating

Enphase Energy (NASDAQ: ENPH) stock price deep sell-off continued after the company published disastrous financial results. The shares crashed to a low of $80, the lowest level since October 2020. It has plunged by more than 76% from its highest level in December 2022, giving it a market cap of over $12 billion.

Clean energy stocks are getting clobbered as demand slows and as interest rates jump. On Thursday, shares of Siemens Energy plunged by more 30% and slipped to the lowest level on record. The company announced that it was seeking government guarantees to boost its balance sheet.

Enphase Energy share price crashed by more than 15% after the company published another weak earnings report. Its total revenue crashed by 13.18% YoY to $551 million, missing analysts’ estimates by $15.7 million. Its gross margin narrowed to 48% while operating margin came in at 18%. 

Enphase Energy shipped 531k microinverters in the quarter, led by the United States. US sales accounted for 64% of total revenue as it crashed by 22% YoY and by 16% QoQ. Therefore, these results show that Enphase Energy’s business is slowing at a faster pace than expected.

Its guidance also reflected the ongoing slowdown. The company expects its revenue to be between $300 million and $350 million, which is lower than what it guided a few months ago. Its operating expenses will be between $85 million and $89 million. 

So, is it safe to buy the ENPH stock dip? I believe that Enphase will be in trouble in the foreseeable future as high-interest rates dent consumer behavior. In the earnings call, the CEO said:

Data published on Thursday showed that America’s GDP expanded by 4.9% in Q3, raising the possibility of another 0.25% rate hike. Therefore, I suspect that Enphase and other solar stocks will continue falling until the Fed points to easing of interest rates.

ENPH chart by TradingView

Turning to the weekly chart, we see that the ENPH share price peaked at $340 in December last year. Since then, it has slowly melted down and reached the psychological level of $80.

Along the way, Enphase shares have remained below the 50-week and 25-week moving averages, signaling that bears are in control. It has recently dropped below the key support level at $109.74, the lowest swing in May 2021 and January 2022. The MACD remains below the neutral point.

Therefore, the shares will likely continue falling in the coming months as sellers target the key support at $70. The stop-loss of this trade will be at $100.

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