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Enphase Energy, Inc. (ENPH) Message Board

  • traderguido traderguido Sep 28, 2012 6:15 PM Flag

    Reasons for Enphase price drop

    Well, this certainly does suck but there is nothing coming out of the company to explain this horrific share performance that has cut the original March IPO clean in half so it’s up to us to speculate.

    From reading this board and various news sources, four (4) possible reasons I’ve gathered for this sharp drop in share price might be:

    1) – End of final IPO lock-out so some original investors are deciding cash is a better bet and they are now free to express it by selling at 6-months post IPO and cutting their investment nearly in half.

    2) – A site called ‘Street Insider’ just reported that the drop comes on the news of an “abrupt” CEO change. Perhaps they missed the August announcement?

    3) – Concern that expenses from global expansion will exceed analyst expectations is causing the severe sell-off.

    4) – Launch of the new SMA Micro Inverter has investors wary of competition.

    I’ve heard plenty but seen nothing on the shelves or on the installer airwaves about SMA making any splash in this arena. Same with the Auroras. Has anyone actually installed, had installed or seen an SMA or Power-one microinverter for sale or installed one on a project? Just curious.

    Here are a few of my own thoughts:

    5) – Another possibility (and my favorite) is that it’s the end of a quarter today so the powerful hedge fund(s) that hold the current 872,000 shares short simply wanted to show a very glimmering quarter . . . and they most certainly did.

    They could not have covered yet, but their books must look VERY sweet right now since they started shorting heavy when this thing passed the $9.00 mark. Covering will be much easier now since selling to them below $6.00 never looked so good as from remembering riding out that $4.00 share price.

    6) – Now this one is the wildcard - If any suitors were interested in taking over Enphase, then shorting the heck out of it to soften up and shake-out shareholders would make sense.

    Shorting becomes less risky if you are confident that a takeover bid will become acceptable to shareholders. Since the greatest risk to shorting a high-growth company is the unlimited upside risk, knowledge of a merger puts a cap on that loss and makes it another small part of the acquisition expense.

    If you can afford to hold shareholders’ heads underwater long enough, they’ll sell and you’ll limit your loss on covering. Sad but I’m pretty sure it’s a legal takeover tactic. And with the allowance of naked shorting and the removal of the up-tick rule, it’s not too tough to pull off if you have the capital.

    Let us all know if you have ideas to add to this list. Anyone? Bueller?

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    • Has anyone actually installed, had installed or seen an SMA or Power-one microinverter for sale or installed one on a project?

      Yes, in Italy, according to Power-One, who say they will be selling their microinverter in the US before Christmas. Then again, they have been saying that for a long time. Their inverter looks smaller, with cheaper connectors and cabling, and it will accept a larger range of input voltages, eg 90- as well as 60-cell PV modules, or 2 60-cell modules in series, in a warm climate.

      Enphase has had most of the microinverter market for a long time. Now they have competition from 4 or 5 companies, eg Power-One, an older company with more than one product and 10X more employees than Enphase. I have heard that Siemens is working with Enphase. I suppose all these renewable businesses depend on government rebates.

    • A lot of the 3 and 6 month lock up shares are free in IPO's were given to ones in the company. Just like Facebook you have a ton of millionaires on paper that didn't cost them a dime that work for the company.

      • 1 Reply to sirtom99
      • Wrong, the “free” shares, as you put it, are incentive compensation. Don’t confuse compensation shares with the shares that were sold by the underwriters as part of the IPO.

        Compensation shares don’t fully vest for 4 years so those employees getting “free” incentive shares won’t be selling for quite some time. And in some cases, even that will require certain performance criteria. You need to read your form 4’s. Kumar is the rare exception and his separation compensation was clearly spelled out in the August announcement of his departure.

        One need only look at the chart volume for March 30th to clearly see that the majority of IPO shares (float) never saw the light of day and are still held tight by original investors. Of the few million shares that made it to market, almost 900,000 shares are already sold short.

        Please re-read that last sentence again. So think about it. As a percentage of float, short interest looks incredibly high. But as a percentage of shares actually trading on the market, SHORT INTEREST IS STAGGERING!!

        In fact, short interest is so high, that it is without a doubt, the single reason for the decline in share price. That and the few little guys that they are shaking out.

        With the Euro economy the way it is, I see U.S/North American growth to continue to be the strength of Enphase. But while that weak economy in Europe will make the overall solar market slow in Europe, it will make the Enphase system design more attractive. It all about forward looking market share.

        Maybe the shorts will be right and microinversion will die but sales growth relative to central inversion seems to indicate otherwise. SMA yoy profit fell 53% on a yoy 7% decline in sales. ENPH sales grew 88% and they're ahead of schedule on making it to profit.

        Sentiment: Buy

9.34+0.17(+1.85%)Jul 11 3:59 PMEDT

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