SolarEdge Stock Climbs On Energy Storage Unit Exit, Job Cuts But Citi Thinks It May Be Short-Lived: Retail Remains Bullish

Shares of SolarEdge Technologies Inc. ($SEDG) rose 16% in mid-day trading on Wednesday after announcing that it will be shutting down its energy storage unit resulting in a workforce reduction of 12%.

On Stocktwits, SolarEdge was among the top 10 trending stocks. However, Citi thinks the increase in SolarEdge’s share prices “may be temporary.” 

This decision will lead to the loss of about 500 jobs, mostly in South Korea, where the company’s 2GWh manufacturing site is located. 

The smart energy tech company, known for its inverters, expects to save around $7.5 million in operating expenses each quarter, with full savings expected by mid-2025. 

SolarEdge also plans to sell its energy storage assets, including battery cell and pack manufacturing facilities.

This move will not affect its solar-related battery sales for residential and commercial markets, the Israel-based company pointed out. 

Citi agrees the move makes strategic sense given the domestic content requirements and the specific cell chemistry used at the facility, it may not be enough to address the company’s financial health.

SolarEdge reported a 64% decline in Q3 sales compared to the previous year, which led to a significant loss of $15.31 per share, far exceeding Wall Street’s estimates of $1.66 per share loss. 

A recent write-down of $1.03 billion related to inventory issues has further strained its financial health.

The company has been grappling with elevated inventory levels due to weak demand, particularly in Europe – the company’s largest market – where competition has intensified with Chinese manufacturers gaining ground.

Citi has maintained a ‘Neutral’ rating and a $12 price target on SolarEdge shares. 

SolarEdge Technologies Inc. Sentiment and Message Volume on Nov 27 as of 12:20 p.m. ET | Source: Stocktwits

Retail sentiment around the stock remains ‘bullish’ (55/100) with ‘normal’ levels of chatter. 

Given Wall Street’s bearish outlook on the stock, some users suggested that SolarEdge’s stock is being manipulated by market makers. 

Others recommended booking profits while the price is still up. 

Despite today’s gains, SolarEdge shares are down 82% so far in 2024. 

SolarEdge Technologies Inc. stock movement so far in 2024. | Source:TradingView

Last year, it was the most losing stock on the S&P 500 ($SPX), resulting in its delisting from the index. 

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