Why SolarEdge Technologies Stock Is Burning Bright Today

A struggling next-generation energy company SolarEdge Technology (SEDG 8.55%) The latest news on Thursday gave investors reason to be sunny and cheerful. The company announced the closure of one of its less important businesses, and the market responded by pushing the stock higher by nearly 9%. It was a stark contrast to the sluggish performance. S&P 500 The index ended the day down 0.4%.

pull out the plug

Before the market opened, SolarEdge announced it was ceasing all activities in the energy storage sector. This will affect approximately 500 workers, most of whom are in South Korea. The solar company expects the move will save it about $7.5 million per quarter. If you intend to sell assets related to your business, this may include any manufacturing facilities you may have.

In a press release announcing the move, SolarEdge quoted interim CEO Ronen Faier as saying, “We focus on our two key priorities: financial stability through cost reduction, positive cash flow performance and a return to profitability, and a return to profitability.” “It means continuous execution of what you focus on,” he said. Our business lines include solar, PV attached storage and energy management capabilities.”

Certainly not coincidentally, this announcement came not long after SolarEdge reported its third quarter results. To say the least, it was not a fruitful time for the company. Revenues were dangerously close to the low end of management guidance and down 64% year over year. Meanwhile, GAAP net income plummeted to a loss of more than $1.2 billion from a loss of $62 million in the year-ago period.

Up to the basics

SolarEdge’s current focus is wisely to focus on its core business of providing an array of solar energy products. However, the industry is highly competitive and has not expanded sufficiently to accommodate many profitable businesses. Investors should be very careful not only with this stock, but with the solar sector in general.