The solar installer base has strengthened across the country, but the largest companies still loom largest. When they sneeze, the industry catches a cold. Here are some of the latest comings and goings at the top of the market following first-half earnings calls.
SolarCity cut backs
Tesla closed a dozen solar installation facilities around the country as part of a round of layoffs this summer, according to Reuters, in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona, and Delaware. The installation facility closures leave the company with about 60 solar installation facilities nationwide. The laid off workforce includes installers, telemarketers, and customer service personnel. Tesla is also pulling out of its Home Depot deal.
Does this spell trouble for SolarCity / Tesla? Well, not necessarily. The company is saying this is part of its reorganization efforts after acquiring SolarCity last year – the closings are all SolarCity-specific locations. Since the acquisition, Tesla has been streamlining and combining more of the two companies’ portfolios.
SunPower leaves utility-scale, Enphase acquires microinveter business
The SunPower fit in the utility-scale market never made a ton of sense, and with PPA prices falling as far as they have, SunPower announced it was leaving that space to focus on residential and commercial and industrial projects, with an eye on growth in both storage and services.
“We see the North American distributed generation market really evolving over the next two years, from just solar, to solar-plus-storage, then eventually to solar-plus-storage-plus-services,” said CEO Tom Werner.
The company also sold its microinverter business to Enphase Energy, Inc. for a total of $25 million in cash. This is going to boost the AC Modules market with SunPower’s Equinox Home Solar System now coming with a custom line of Enphase’s IQ microinverters.
“We are excited to close the acquisition of SunPower’s microinverter business ahead of plan,” said Badri Kothandaraman, president and CEO of Enphase Energy. “We now expect volume shipments of IQ 7XS microinverters in the fourth quarter of 2018 and an acceleration of the ramp throughout 2019. The business is on track to achieve its full revenue and gross margin potential. ACM is a significant component of our profitable top line growth strategy. We look forward to being a strong innovation partner for SunPower.”
Speaking of Enphase…
Prescience Point Capital Management, a private investment manager that focuses on investigations of public companies, published a negative follow-up report to support its short position on Enphase. Since the release of its initial report on Enphase, Prescience Point has identified numerous additional red flags which further call into question the reliability of the company’s financial statements. Here are the bullets from the report:
- Our analysis of ENPH’s Q2’18 results indicates further doubt on the reliability of its financial statements.
- Management tried to explain away some of the red flags highlighted in our Initiation Report; however, management’s explanations in some cases conflict with statements previously made on the record and in other cases defy logic.
- Despite our doubts about the reliability of its accounting, ENPH still missed Q2 consensus estimates and whiffed on guidance. The 12.9% and 8.9% YoY decline in ENPH’s Q2’18 inverter volume and adjusted revenue, respectively, indicate that its business is deteriorating at a faster pace than we initially thought.
- According to sources, former SunEdison CEO Ahmad Chatila is currently working for ENPH. ENPH appears to have adopted many of the same practices which ultimately led to SUNE’s downfall.
- Prescience Point reiterates our estimate that Enphase stock is worth ~$1/share on a fundamental basis, implying 80% downside.
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