SolarEdge's struggles deepen: Fourth consecutive quarterly loss and stock plunge
SolarEdge's struggles deepen: Fourth consecutive quarterly loss and stock plunge
The Israeli renewable energy company, which is struggling with excess inventory and high interest rates, reported a net loss of $130 million, compared to a net profit of $119 million in the same quarter last year. The company has undergone two waves of layoffs this year and the stock has plummeted by 75% since the beginning of 2024.
After two waves of layoffs since the start of 2024, the difficult year for SolarEdge continues with the company reporting a quarterly loss for the fourth consecutive time.
The loss for the Israeli renewable energy company was $1.90 per share - higher than analysts' forecasts of a loss of $1.58 per share. SolarEdge produces a variety of products related to solar energy, primarily inverters that convert voltage and maximize the efficiency of solar panels.
Its total revenues amounted to $265 million in the second quarter of the year, a 73% decrease compared to the same quarter last year. The company's operating loss was $11 million, compared to a profit of $317 million in the same quarter last year.
Since the beginning of the year, the Israeli company's stock has plummeted by 75%, due to two main reasons, the first being the excess inventory of SolarEdge products in Europe. With the outbreak of the war in Ukraine in February 2022 and the cessation of Russian gas supply, there was a large wave of investments in renewable energies in Europe.
SolarEdge's sales soared, and the company's sales, which in 2021 became the first and only Israeli company in the S&P 500 index, surged until falling from the S&P in 2023, amid declining results. The growth rate of renewable energies in Europe has been lower than initially expected, leading to excess inventory of the company's products among suppliers in Europe, which naturally led to a decline in sales.
The rising interest rates, mainly in the U.S., have also hurt the company. The installation of solar panels on the roofs of private homes in the U.S. is based on loans taken by homeowners. Therefore, as interest rates rise, the economic viability of solar projects for private homes - a key area of activity for the company - is affected.
These two factors led the company to record a loss of $130 million in the second quarter of 2024, compared to a net profit of $119 million in the same quarter last year. To cope with the sharp decline in sales, the company underwent two waves of layoffs during the year: the first was in January when the company announced the layoffs of 900 employees, which at the time accounted for about 16% of the company's workforce.
The second wave was just last month when the company announced the layoffs of about 400 employees - half of them in Israel. The company now has about 4,200 employees remaining. Additionally, in June, SolarEdge CFO Ronen Faier announced his departure from the company.
