Enphase Energy Slips Premarket After Gloomy Q3 Outlook As Trump Tariffs Batter Margins

Enphase Energy (ENPH) stock slipped over 7% in premarket trading on Wednesday as the solar inverter maker projected third-quarter revenue below Wall Street’s estimates.

The solar inverter maker said on Tuesday that it expects third-quarter revenue to be between $330 million and $370 million, with the midpoint being lower than analysts’ expectations of $368.6 million, according to Fiscal.ai data. Peer SolarEdge also slipped 1.2% in premarket trading.

The company added that, despite the lowering of tariffs on Chinese imports, it still expects a gross margin impact of between 3% and 5%. The company ships the bulk of battery cell components from China. While it is taking steps to bolster domestic manufacturing, the recently passed Republican tax and spending bill has further piled pressure on Enphase and its peers.

The landmark legislation aims to swiftly eliminate the 30% production incentives currently available to wind and solar projects, as the Trump administration has granted tax incentives to fossil fuel companies.

Retail sentiment on Stocktwits about Enphase was still in the ‘extremely bullish’ territory at the time of writing.

“Solar industry must evolve rapidly in response to the recent tax reconciliation bill,” CEO Badri Kothandaraman said in a call with analysts. He added that the company remains on track to produce battery cell packs domestically by the end of the year.

“The industry must drive down customer acquisition and selling costs to remain competitive in a maturing market,” Kothandaraman added.

However, a seasonal uptick in demand helped it top second-quarter profit estimates. The company reported adjusted earnings of $0.69 per share, which exceeded estimates of $0.62 per share. Its North America revenue grew 3% sequentially, while revenue in Europe rose by 11%.

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