That seems like a great question we’re all waiting on. My guess is there will be no immediate effect. It could take several quarters to get a take on independent performance of the EES business as it establishes.
Commercial sites are production critical and they want minimal downtime, so from a commercial system perspective, the advantage will be a crew with necessary hardware and expertise on hand for a fast resolutions.
Once a good EES reputation is established, I would expect that to in-turn feed growth of the installation business and hence the EES model. It seems like this reputation for minimal downtime could take time to build. It should be a powerful Enphase advantage since single module-level failures don’t bring down entire arrays to begin with so production doesn’t stop for an array anyway. Add to that a rapid response team and you likely have a strong ticket to success for commercial solar producers.
Not exactly new. The TSLA/SCTY batteries have been around for a while. Expensive, but a nice option that may become mandated by some utilities. I'm hoping ENPH can produce a more realistic price-point for residential system owners with their AC BAttery.
The Nasdaq website today updated total short interest to 5.2 million shares for the March 13th report, up 500,000 share from two weeks prior. Share price dropped from 15's to 12's in that time and no doubt more short interest will show on the next report. Levels haven't been that high for a year and they helped boost share price to 18 bucks on solid performance.
Now Enphase is profitable, has improved retained value by adding Next Phase and they are still growing at a double digit pace. This should get very interesting.
As far as GS and the Boys go, they’re a powerful underwriter and it’s their playground so expect them to make it as painful as possible to hang on to shares of Enphase for the near future. Their analyst has already scared away plenty of shareholders and now whatever press they can influence should begin kicking in and trying to add to the fear factor until the SEDG IPO is completed. Everything I’m seeing is bullish for business so don’t worry, they’ll get theirs. It’s taken over 5 million shares of short interest to frustrate shareholders and at some point, they’ll be looking to cover as Enphase demonstrates continued growth with reduced dependance on Vivant.
If SCTY truly thought Solar Edge was a solid technology, they’d have bought them long before any IPO could happen. You can already find the first nightmarish SolarEdge failure stories online. Those system owners are quickly learning that there is no substitute for having a system that continues to allow all other modules to produce at optimum when just one fails. Keep a close eye on the warranty obligation on the books for SEDG once they’ve had a year or two of scrutiny as a publicly traded company.
And their production numbers are already strong again and have never included any dealings with or dependance on SolarCity. And the best part is that it looks like dependance on VSLR is a non issue. In Hawaii, VSLR may not have much of a choice since even if HECO doesn't force it, grass roots demand for quality there will likely support Enphase. System owners talk to each other. At some point, word-of-mouth becomes the true value of brand recognition.
This was an ugly triple witch day to be sure. That 213K MOC at $12.48 was a coup if it was hedges covering. There is no longer doubt about manipulation. The only question is why?
In my guesstimated order of likelihood, here are some possible motives for driving share price down:
1-render options values worthless for triple witch
2-frustrate investors into moving capital elsewhere (read SEDG IPO) which relates to
3-attempt to cover exuberant short position at lower price
4-attempt to accumulate larger long position at lower average price
5-attempt to accumulate additional controlling ownership
1-A ton of $15 March contracts expired today. There were over 1800 $15's. It’s one of the largest open interests I’ve seen for this company so it is definitely my number one choice of reasons. Someone probably bet the farm on hitting $18 on the last earnings blowout and lost it all. Options can make fast money or clean you out in a hurry. Man that’s got to hurt. It makes the 523 $12.50 contracts look like nothing.
2-The GS IPO underwriter motive is still out there but today’s options expiration carries a lot of weight.
3-The short positions in this are clearly overkill and are likely also the result of hoping for an earnings opportunity, but to the downside. Now hedges are overexposed and forced to risk even more short exposure to frustrate holders in hopes of triggering stops.
4-If someone has the tools, recent price drops would be a way to average down a cost basis
5-This is least likely but I list it only because of the growth and how clean the books are. The Enphase books almost look groomed for M&A activity.
I'll bet there's more than another 100K shares short today holding it down. I wouldn't be surprised if the next report on NASDAQ site puts us over 5 million shares total short interest.
6-month guidance wouldn't hurt. With 10 analysts already forecasting through 2016, I guess Kris S. couldn't do much worse.
As far as getting bought out, I'm not too sure it would be by the competition. Their growth metrics could price them at 3-times next year's revenues so it could take some cash. Enphase has a deep pocket of intellectual property so competing has meant reinventing the wheel and is very expensive to try. PWER was trying on the way out. ABB thought they got a "cheap" Enphase purchasing PWER for over a billion and that hasn't panned out. Enecsys tried and is now bankrupt and in administration begging for buyers to keep the lights on. SOL has so much debt they are S.O.L. SMA is also hoping for a buyer.
As for potential buyers with cash, GE and Siemens come to mind since Siemens already has their name on Enphase inverters. My guess is that the board has likely already declined offers. I don't expect a buyout but if it happened I'd guess a large holding company like BRK would see Enphase on their growth radar and invest for brand value and the global expansion and keep the name.
Solar City is door-to-door solar leases. “Just sign on the bottom line ma’am.”
Just look at their books. Expense growth has far outpaced revenue growth so they need to keep the expense ledger as low as they can at all costs. Providing lease customers with online system monitoring (like Enphase) would be a nightmare for them. They don’t want to return to a job unless absolutely forced to. It’s just not in the budget.
It should come as no surprise that a year ago Goldman Sachs thought SCTY would be trading at about $80 - $90 by now. It also does not surprise me that SolarEdge is desperate enough to give away product to Solar City just to print revenues. Enphase has an organic market demand that has taken years of actual reputation for reliability to attain. That is how Enphase ultimately sustains a margin above 30 percent. 2013 saw at least four new micro-inverter competitors hit the U.S. market. A lot of installers tried them including models by SOL, ABB (previously PowerOne), SMA, Enecsys and others. Their experiences spanked them back to Enphase and their reasons helped fuel the next product generationts by Enphase.
For four quarters since those competitive launches Enphase has had better than 40% sales growth and they’ve now erased all debt. GS, BAC and DB didn’t see that coming. I do not think Enphase should cave into any demands for longer-term guidance. And testing the heck out of the battery systems before releasing them to market makes perfect sense when protecting such a hard-earned reputation for reliability. An analyst’s job is to be able to recognize market loyalty and invest in it. When AAPL could get no love trading in the single digits, the successful analysts saw brand loyalty and invested accordingly.
An excellent and very telling article came out yesterday entitled:
-Hawaii Faces Massive Logjam of Solar Permit Applications.-
Rather than risk losing this post by attempting to provide a link, searching the article title works well.
-The grid utility, Hawaii Electric Co. (HECO) had been drastically cutting solar permit approvals over the last several years
-The reason may have been simply financial or stability related, or both
-Enphase demonstrated grid interaction for 800,000 systems in front of HECO and IEEE.
Now the most important part:
Quote: “As a result of the success of the Enphase firmware upgrade,” the state of Hawaii’s Public Utilities Commission has ORDERED HECO to knock it off and start mitigating the bottleneck of PV applications. No matter how you slice it, this is HUGE.
And guess what the preferred PV micro system will be thanks to a brilliant software run, cloud based system will be? You only get one guess so get it right.
Naturally this advantage for Enphase has global implications beyond the HECO grid. Add to that; experience, warranty, reliability and you have a very bright future beyond feed-in tariffs. Enphase not only ensured that they have a solid future in solar/renewables, they lead the future.
The article also speculates that the massive data collected by Enphase will likely have financial value if not already.
Good article and even comments here. It's an article on Microinverters vs string but the comment section becomes quite revealing about SolarEdge as a rep for the company gets caught up in his own hype. Reading the comments is essential. Hang on to your ENPH shares.
Since the article, Enecsys has gone to administration and will probably go away.
First I offer thanks to the regulars here for making no mention of my previous oversight. I sure wish there was an edit option . . .
The GS motive is still now revealed as attempting to move inverter investment capital from Enphase to the SolarEdge IPO. But perhaps a primer on the optimizer marketis in order.
For those not aware, SolarEdge, like Tigo, is a leading maker of “optimizers”. Solar optimizers are panel monitoring devices for central-inverter systems whose owners don't want to be blind as to problems and where they are occurring. Optimizers also must be installed at each panel like a micro-inverter but still require a central inverter for the system and must be spliced in at each panel. They almost certainly were conceived back when central inverters were the only feasible type of PV system on the market. Since central inverter market is on a rapid decline, any share in that market is not a promising investment.
Optimizers simply report some of what an Enphase inverter does but can cost nearly as much and they still do not provide any power inversion. They are relatively labor intensive and thus expensive to install. And with warranty life less than half an Enphase micro-inverter, most installers do not see value in designing new systems with optimizers. For the skeptics, you can download an installation guide from the SolarEdge or Tigo websites for your own estimation of install time and cost.
I have tried to see an upside to optimizers and honestly can’t come up with a feasible use. If I inherited an existing relatively new central inverter system, it would be nice to add Enphase-like monitoring to it by installing optimizers at each panel, but the cost to do so would take years of production to recover.
Incorporating them into a new central inverter system puts the cost considerably higher than an Enphase system plus leaves the system with many more points of potential component failure and still a short warranty life.
The reason for the exuberant short interest has been the expectation that VSLR and CSIQ would trigger a major sell-off in solar today. Plenty of solar investment money was sidelined on the same concern.
With that expectation reversed and with spring production numbers kicking in, ENPH has yet to truly respond to its own earnings blowout. Investor accumulation now resumes while hedge funds try to manage their new monstrous short positions.
Today CSIQ reported 51.7% YOY growth with a 19% margin.
ENPH delivered 57% YOY growth with a 33.5% margin.
The market has not responded yet because about 4.5 million shares of short interest have countered the effect of 4.5 million shares of accumulation. Things should normalize soon enough.
They got next phase for $2.5 million? How?
Cash is up to $42 million
Debt is down to ZERO!
57 percent yoy growth and raised guidance.
I just can’t wait top hear the hedge funds attempt a negative spin on this.
It's particularly surprising considering the major Enphase grid advantage revealed today with the headlines on Hawaiian Electric. I knew they were working on firmware updates to allow remote system control but what they've demonstrated is leagues beyond any competition. Certainly much more significant than the CSIQ purchase announced today.
I agree with your statement that this recovery is mild. Share price is still only marginally above the original IPO even though all fundamental metrics have transformed for the better, most notably non-domestic sales expansion. Analyst price targets are all over the map because so few can differentiate solar technologies and the importance of reliable brand recognition in marketing micro-inverters.
SCTY throws so much money at marketing that their profit point is unforeseeable. They have 10-times the debt ratio of Enphase. Jinko is much worse.
Q4 and Q1 are slow quarters for solar. If ENPH shows flat YOY sales then maybe the current market cap makes sense.
These guys started selling M190’s 6 years ago and the M215 four years ago. If they are still delivering YOY growth better than 20 percent in this new brutally competitive solar environment, then this is bargain basement pricing here in the 11’s and 12’s
Excellent post. However, if the tactics are truly not available for review, than prudent they are since that leaves only the SEC to do the work of catching and stopping them. That is if, in fact, it can be shown they're breaking any laws. Sadly, the film -Boiler Room- gives a depiction of SEC monitoring that is likely more accurate than most realize.
They also collectively own the press and will always have the capital and technological advantage to move share price at will. The damage to the common investor is often catastrophic but hat will never be enough to stop that IRATE hedge fund guru you refer to from calling in a favor from a well-known investment banking firm to assist in an opportunity to cover an otherwise imprudent short position.