On Wednesday, SolarEdge Technologies (SEDG, Financial) experienced a 16% trading boost that pushed its stock to its highest point since last May because the company reported robust Q4 revenue, which beat expectations. However, the quarterly Q4 revenues declined by 38% from the previous year and 17% from the last quarter to $196.2 million but exceeded analyst estimates by about 4% compared to Bloomberg consensus. SolarEdge Technologies predicted Q1 revenue levels between $195 million and $215 million following a period of continuous downward projection.

A strong performance caused investors to engage in short-selling because excessive shorts exceeding 34% of outstanding shares raised market activity. Guggenheim analysts found that SolarEdge managed to generate positive free cash flow through its effective handling of inventory and trade receivable reduction. The positive indicators follow the company's $1 billion inventory writedown to its worst financial shape which took place just three months ago while management issued margin-loss warnings at that time.

Investors must determine if a positive revenue beat justifies ongoing operational problems in the company. The company demonstrates a cautious commitment to reaching sustainable growth through its management of market volatility. The market follows SolarEdge's evolving turnaround plan closely since the company has maintained high short interest while undergoing industry changes.