What Happened?

Shares of solar power systems company SolarEdge (NASDAQ:SEDG) jumped 35.2% in the pre-market session after the company reported impressive fourth-quarter results, which blew past analysts' revenue expectations. In addition, it posted positive free cash flow and guided for more of the same in 2025 (both Q1 and full year). On the other hand, its EBITDA and EPS fell short of Wall Street's estimates. Still, the company emphasized its 'turnaround story,' likely giving investors more reasons to stay positive. Overall, this was a mixed yet decent quarter.

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What The Market Is Telling Us

SolarEdge’s shares are extremely volatile and have had 77 moves greater than 5% over the last year. But moves this big are rare even for SolarEdge and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 22.3% on the news that the company reported underwhelming third-quarter earnings. Its revenue guidance for next quarter missed, and its revenue fell short of Wall Street's estimates. Notably, the company wrote down $612 million in inventory, reflecting lowered demand, particularly in Europe. As a result, SolarEdge implemented price cuts and promotional discounts to compete in this market, which is likely to result in a shortfall in its margins. Lastly, the company called out seasonal weakness heading into the winter. Overall, this was a challenging quarter for the business, with little reasons for investors to stay positive.

SolarEdge is up 40.3% since the beginning of the year, but at $20.77 per share, it is still trading 75.4% below its 52-week high of $84.42 from February 2024. Investors who bought $1,000 worth of SolarEdge’s shares 5 years ago would now be looking at an investment worth $162.46.

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