Solar panels at the ENGIE Sun Valley Solar Project in Hill County, Texas, on March 1, 2023.
Mark Felix | AFP | Getty Images
Solar stocks slumped on Friday after solar products maker SolarEdge warned that demand in Europe had weakened significantly, adding to sour sentiment in the renewable energy sector in a difficult year.
The Invesco Solar ETF (TAN) plunged 8.5% in premarket trading Friday and was expected to open Friday’s trading session at $42.60, its lowest level since July 2020.
SolarEdge plunged nearly 28% in early trading after the company reported declines in revenue, gross margin and operating income in the third quarter and expected fourth-quarter revenue to be “significantly lower.”
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The solar sector has already struggled this year as rising interest rates hurt the financing environment for U.S. solar installations. SolarEdge and the TAN ETF were down 59.7% and 35.9%, respectively, year-to-date as of Thursday’s close.
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Invesco Solar ETF (TAN)
Goldman Sachs double downgraded SolarEdge from “Buy” to “Neutral” on Friday. The company said the weak demand environment in Europe poses questions for the company heading into 2024 and is a much bigger issue than just seasonality.
“After a second consecutive quarter of disappointing results/guidance, we find it difficult to defend the stock: we underestimated the impact of the combination of continued inventory, end-market demand and now margin issues, which will likely serve as headwinds for the stock.” the foreseeable future given what appears to be significant deterioration in visibility,” analyst Brian Lee said in a note Friday.
—CNBC’s Michael Bloom contributed to this report.