SolarEdge Tumbles 9.5% as Solar Industry Faces Widespread Decline

Key Takeaways

• SolarEdge (SEDG) closed down 9.5% at $36.57 on February 27, trading on approximately half its typical daily volume.
• Solar stocks experienced significant declines, with Sunrun plummeting 35%, Array Technologies falling 34%, and Shoals Technologies dropping 31% following quarterly reports.
• Industry-wide challenges include tariff-related margin compression and reduced federal incentives dampening residential solar adoption.
• While SolarEdge exceeded Q4 earnings expectations, the company continues operating at a loss with a net margin of -34.2%.
• Wall Street maintains a “Reduce” rating on SEDG, with the consensus price target of $27.28 indicating potential downside from current levels.

Shares of SolarEdge Technologies (SEDG) declined 9.5% during trading on February 27, finishing the session at $36.57 compared to the previous close of $40.40.

SolarEdge Technologies, Inc., SEDG

Trading activity was notably subdued, with approximately 1.57 million shares changing hands — roughly half the company’s 3.16 million share average daily volume.

The decline in SEDG wasn’t an isolated event. The entire solar industry experienced significant downward pressure throughout the week.

Sunrun plummeted 35% following its earnings announcement. Array Technologies saw shares drop 34%. Shoals Technologies declined 31%. First Solar fell 14%. The Invesco Solar ETF registered an 8% loss for the week — marking its steepest five-day decline since June.

This widespread selloff signals fundamental challenges facing the industry rather than temporary market volatility.

Tariff pressures are compressing profit margins at companies including First Solar, Array, and Shoals, with each citing these impacts during quarterly earnings discussions. Changes to federal energy policy have reduced financial incentives for consumers, while demand in the residential solar market shows signs of deterioration.

According to Wood Mackenzie forecasts, U.S. residential solar installations are projected to contract by 18% in 2026.

Sunrun’s quarterly results provided evidence of this declining trend. The company reported a 17% year-over-year decrease in new subscribers during Q4 2025 compared to Q4 2024, while the net value per new customer fell 30% in the period. The company’s 2026 outlook further dampened investor confidence — Jefferies analyst Julien Dumoulin-Smith downgraded the stock from Buy to Hold, pointing to expectations for “a more prolonged period of market contraction.”

First Solar’s Contract Backlog Signals Industry Headwinds

First Solar’s contract backlog declined to 50.1 gigawatts by year-end 2025, representing a significant drop from 68.5 gigawatts at the beginning of the year.

The company experienced more contract cancellations and terminations than new bookings during the quarter — marking the seventh straight quarter of declining backlog, according to Raymond James analyst Bobby Zolper.

Zolper observed that the company’s 2026 and 2027 projections fell approximately 15% short of earlier expectations across key metrics including shipment volumes, revenue, and EBITDA. He maintained a Market Perform rating, stating he would “wait out the near-term negatives.”

SolarEdge Posted Better-Than-Expected Results

Despite the share price decline, SolarEdge delivered fourth-quarter results that surpassed analyst forecasts. The company reported an adjusted EPS loss of $0.14, narrower than the anticipated loss of $0.19. Quarterly revenue reached $333.8 million, exceeding the $330.33 million consensus estimate and representing a 70.9% increase year over year.

However, profitability remains elusive. The company’s net margin stands at -34.2% with return on equity at -45.5%.

Wall Street’s view on SEDG leans bearish. The consensus recommendation is “Reduce,” comprising one Buy rating, 16 Hold ratings, and seven Sell ratings. The average analyst price target of $27.28 sits below the stock’s current trading range.

Recent analyst activity includes Deutsche Bank lowering its price target from $35 to $33 while maintaining a Hold rating on February 20, and Morgan Stanley increasing its target from $33 to $40 with an Equal Weight rating on February 19.

The stock’s 50-day moving average stands at $33.76, while the 200-day moving average is $34.19. SEDG maintains a market capitalization of approximately $2.06 billion with a beta coefficient of 1.66.

Institutional ownership accounts for 95.1% of outstanding shares.

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