SolarEdge (NASDAQ:SEDG) is a California-based company that designs, develops, and sells direct current (DC) optimization inverter systems for solar photovoltaic (PV) installations around the world. On January 21, 2024, the company announced that it would move forward with layoffs for 16% of its workforce. What is behind this latest move? How should investors digest this news?
The company said that it proceeded with the extensive layoffs to trim operating costs. SolarEdge released its third quarter (Q3) fiscal 2023 earnings on November 1, 2023. In Q3 2023, the company reported total revenues of $725 million – down 27% compared to the previous quarter and down 13% compared to Q3 FY2022.
Moreover, revenues from the solar segment plunged 29% quarter-over-quarter to $676 million and 14% from the previous year. GAAP operating expenses were up 16% year-over-year to $159 million.
Many investors have not been too quick to sour on the solar space, especially considering the growth trajectory for renewables. Fortune Business Insights (FBI) recently valued the global solar power market at US$167 billion in 2021. That same report projected that the market would grow from US$234 billion in 2022 to $373 billion by 2029, which would represent a compound annual growth rate (CAGR) of 6.9% over the forecast period.
Investors can expect to see SolarEdge’s final batch of fiscal 2023 earnings in the first half of February. Shares of SolarEdge currently possess a favourable price-to-earnings ratio of 18 at the time of this writing.
