The Solaredge stock (SEDG), has suffered a terrible year, losing almost 90% of its market value. Profitability is a problem for the company that develops inverter systems.
SEDG announced earlier this week that it would be laying off approximately 400 employees in order to improve efficiency, reduce costs and increase profitability. The company is also reducing discretionary expenditures along with the headcount reduction.
The market is the reason for the layoffs. In late 2023 or early 2024, the reduction in demand meant that there was an excess of inventory in Europe.
The Trump effect has caused solar stocks to plummet
Donald Trump doesn’t seem to be a big fan of renewable energy. Donald Trump called the plan a scam and said it was a scheme to make China wealthy.
Solar stocks will naturally fall when Trump’s chances of winning elections increase. Solar stocks suffered a huge blow when Donald Trump was assassinated.
How bad does Trump’s clean energy policy really are? It is understandable that his policies might not favour solar stocks the same way as they did before. It is unlikely, however, that he will declare a full-scale war on the solar sector.
The current market dip is likely to reflect the downsides of a Trump presidency.
Bullish on the market
Sunnova’s CEO John Berger predicted a big demand increase for solar energy companies earlier this month. Sunnova’s stock, like SEDG has struggled in this year. It is currently down by 60%.
What the CEO said about demand pickup
The Inflation Reduction Act has led to a huge amount of investments, including billions upon billions in support of solutions. IRA will remain on hold, regardless of the winner of the White House.
The CEO made it clear that even if Trump is elected, he does not expect a major shift in the policy.
Corrine Blanchard, an analyst at Deutsche Bank, also thinks that elections won’t have much of an impact on the solar stock market. The 45X credit and the 301 tariffs, she believes, are secure no matter what the results of the election. Even though the Trump administration is more unpredictable and riskier, there aren’t likely to be major changes.
Demand will also pick up, she believes, once the interest rate falls and macro-conditions improve.
Watch here: https://www.youtube.com/embed/MAljjquYeyE?feature=oembed
Test an old support area
The stock just recently reached an area that is of interest.
The stock price was once a strong resistance 8 years ago. It then became a support, and was tested successfully twice in 2018, as well as one time in 2019.
The stock is now back at those levels, and it’s likely that they will stay there until the demand increases.
The post is titled Is SolarEdge the best stock to buy? This post may change as new information unfolds
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