SolarEdge tanks after CEO resignation, is it still worth buying?
- SEDG stock drops 6% after CEO resignation, adding uncertainty to company’s future.
- Supply chain issues and residential solar market challenges weigh on growth prospects.
- High short interest and volatility suggest caution for potential investors.
SolarEdge (NASDAQ: SEDG) stock fell after the market opened on the news of the resignation of its CEO.
The company has just announced that its CEO Zvi Lando is no more leading the company.
Ronen Faier has been appointed as the interim CEO while the company looks for a long-term candidate.
The exact reason for the resignation is not yet known. However, the uncertainty has killed the momentum of the stock which is down 6% after the market opened.
Even though this resignation can be seen as an opportunity for a fresh start and better leadership, shareholders are having none of it.
Ronen Faier is the former CFO of the company, which he joined in that position in 2011.
Between 2019 and 2023, he was the general manager of the SolarEdge Storage Division. Before joining SolarEdge, he had been a CFO at both modu Ltd. and Msystems.
The board also appointed Ariel Porat as the CFO.
Positives despite supply chain issues
Copy link to sectionSolarEdge has been dealing with some supply chain issues for some time now.
These issues aren’t restricted to the company as the whole solar power sector struggles to deal with them.
The company has focused its energies on improving energy storage solutions and inverter technologies, both of which are crucial for maximising energy production.
This innovation has helped the company improve its operations and offer new products to meet the increasing demand for solar energy products. This demand, however, has also given rise to fierce competition.
SolarEdge has maintained a strong market position despite the competition, thanks mainly to its commitment to providing improved product offerings.
The company also faces challenges on multiple fronts. Its ability to grow in the residential solar market segment is being questioned.
There is a low chance of recovery in residential solar installations well into next year.
This is going to weigh down on the company’s ability to grow its revenues.
As rate cuts become more likely, the lower borrowing cost should work in favour of the company.
Even though people aren’t willing to spend much on solar installations right now, this could change very quickly once cheaper borrowing is available.
While the potential for market saturation is there, rate cuts could change things very quickly.
The potential for an increase in solar demand is massive and even a small piece of the buy can bring huge upside to the stock.
This is exactly why the stock is volatile, as traders try to balance the growth potential with the short-term headwinds.
Should you buy SEDG?
Copy link to sectionFrom an investment perspective, the stock continues to be tricky. A 33% short interest could make the stock go either way very quickly.
Because the stock is down 83% in one year, the situation seems hopeless for existing shareholders.
These factors do not paint a rosy picture for future shareholders and therefore it could be a good idea to not enter the stock when it’s so volatile.
