SolarEdge (SEDG, Financial) stock has experienced negative market trends lately. The stock performed worse than the broader market index because it declined by nearly 80% in value over the last 52 weeks. The current position below the 50-day moving average levels indicates investors are concerned about this solar company. Numerous serious problems have made investors see that the business faces significant threats.

Fundamental performance remains the main focus of SolarEdge investors, as the company's net income fell to a loss of $1.8 billion and its year-over-year revenue dropped by 70%. The business confronts multiple challenges in asset control while facing hard market conditions. Moreover, the looming tariffs on this Israeli solar company are a major concern because they will drive up supply-chain expenses, which threaten its operational success.

Although this year, the company formed notable partnerships with Summit Ridge Energy and entered safe-harbour agreements, we still need to see how these partnerships will help the company emerge from its crisis. The value of the company remains very attractive as it is trading below the sector median and its own historical advantages, thanks to its sharp stock decline. Despite these challenges, some investors have kept faith in the stock. Most notably, GMO's Jeremy Grantham (Trades, Portfolio) held nearly a 9–10% stake in SolarEdge (about 4.95 million shares) at the end of 2024, after adding to his position in Q4 Jeremy Grantham (Trades, Portfolio) 's

Jeremy Grantham (Trades, Portfolio)'s SolarEdge Stake

SolarEdge Stake Legendary value investor Jeremy Grantham (Trades, Portfolio) started accumulating in SolarEdge in Q3 2016 through his firm GMO, and, has continued buying the stock ever since​. His position now amounts to roughly 4.95 million shares (about 8.5 percent of all outstanding stock in SolarEdge). Most recently, Grantham bought 641,915 shares on Dec 31, 2024 increasing his stake to 4,953,698 shares (versus almost 0.65M shares in early 2023).

Analysts said that SolarEdge's slide has not specifically been mentioned by Grantham, who continues his buy because he is holding long-term value. GMO believes the company is undervalued, trading at around 16× forward earnings despite 20–30% expected annual growth.

This aligns with Grantham's strategy of buying high-quality, beaten-down assets. GMO trimmed or exited other solar positions, like Canadian Solar and Sunrun, while increasing its SolarEdge stake, signaling confidence in its market position and technology. SolarEdge's dominance in solar inverters, solid balance sheet, and industry tailwinds from global climate policy further support the investment.

Grantham has long championed climate investing grounded in valuation, not hype. GMO rotates into clean-energy names when prices fall, turning volatility into opportunity. SolarEdge fits GMO's model of combining environmental impact with sound financials. Thus, the large holding reflects both conviction in the company's fundamentals and a broader belief that clean energy, particularly solar, will drive future returns as part of the low-carbon transition. Grantham sees SolarEdge as a quality asset poised to benefit from the global push toward renewables

Trump 2.0 Energy Policies and Tariffs Scenario

In early April 2025, President Trump unveiled a new “reciprocal tariffs” policy. As part of that package, all Israeli imports to the U.S. will be subject to a 17% tariff. (This 17% figure comes from the reciprocal-tariff formula: it is half of Israel's existing 33% on some U.S. goods.) The announcement came on April 2, 2025 (which Trump dubbed “Liberation Day”).

SolarEdge's products would presumably fall under this 17% levy. Meanwhile, Israel took preemptive action: the Israeli government cancelled all remaining tariffs on U.S. imports (as of around April 1). This was widely reported as Israel offering to level the playing field (in effect, matching the U.S. tariff move by removing its own). When PM Netanyahu met Trump on April 7, he pledged to eliminate Israel's trade surplus with the U.S. (implying more U.S. exports to Israel), but Trump did not agree to cut the new U.S. tariffs on Israeli goods.

In sum, the net result is that Trump imposed 17% tariffs on Israeli imports (including solar), and Israel, in turn, has removed its own tariffs on U.S. goods. No additional “Liberation Day” trade deal was announced at the summit; the U.S. tariffs stand, and Israel rescinded its reciprocal tariffs unilaterally.

Financial Overview

Financial Overview SolarEdge's business has grown enormously over the last decade. In fiscal 2016 (year ended June 30, 2016) the company generated about $490 million in revenue and GAAP EPS of $1.73. Revenues climbed into the multibillion range by 2022 (fiscal 2023), with SolarEdge reporting roughly $2.98 billion in revenue (primarily solar inverters) that year. GAAP EPS was about $0.61 in 2023.

By contrast, for the full year of 2024, the company reported a 70% drop in revenue, along with a net loss of $1.8 billion compared to positive $34 million in the prior year. I believe the reason behind this huge decline is the aggressive price cuts and discount promotions. These measures were taken by the company to tackle weak demand and strong competition from low-cost rivals. But it seems like, despite getting any benefits from these initiatives, it is hurting the company badly.

Nevertheless, SolarEdge's asset‑light model gives some advantage to its business. The company invested just $108.2 million in property and equipment, about 12.0% of its $901.5 million revenue, avoiding the burden of large, fixed factories. By outsourcing manufacturing and focusing on R&D, software, and partnerships, SolarEdge can pivot quickly when demand shifts or tariffs hit.

First Solar, by contrast, invested $1.5 billion in CapEx in 2024, roughly 36.3% of its $4.206 billion sales, building large fabs that require high utilization to justify their cost. When volumes slump, those plants sit under‑used, squeezing margins.

In a volatile solar market, SolarEdge's asset-light strategy offers greater agility and lower fixed-cost risk. Capital-intensive peers like First Solar face more pressure when demand falls or trade policies shift, which can squeeze returns on the factory investments.

Despite these efforts, the company's finances came under pressure due to big losses from asset impairments and write-downs totaling approximately $1.17 billion over the whole year. Although U.S market prices have improved a little, they are not enough to make up for the tough overall market conditions. That's why we have seen the company's profitability hardly being hurt. In 2023, strong sales and better cost control helped the company stay profitable. But in 2024, a big drop in revenue, higher costs, and large write-downs led to a substantial loss. SolarEdge is also losing money on its core business. In Q4, its gross margins were still negative.

On a GAAP basis, margins improved to a loss of 57.2%, up from a terrible loss of 309% the previous quarter. These numbers show better cost control, but the company still isn't making money from its main operations. Although there is a little hope as the company is improving its margin, still, the top-line decline is raising serious issues for the company

There is one positive side of SolarEdge when it comes to operating cash flow. The fourth quarter Cash Operating Flow was $12.3 million. This is the inflection point because Q3 ended with spending $63.9 million on operating cash and nothing else. After the extremely negative $136.7 million of the previous years, the free cash flow came in positive territory at $26 million. Additionally, the company had $81.8 million in an increased cash balance at the end of September 2024 compared to $51.6 million at the end of Q4. This structured cash flow allows for the future projects and operations to be taken on.

However, SolarEdge is still burning significant cash. In 2024 alone, the company had $421.5 million in free cash flow deficit, and I think this burn will continue in 2025, which means that SolarEdge is going to have no top-line growth in 2025. Therefore, if a firm has around $630 million in cash and the free cash flow is negative $400 million per year, that is, the firm will be out of cash in roughly 18 months. SolarEdge will need to raise capital in order to avoid being out of cash.

On the business operations side, in the fourth quarter of 2024, the company shipped 895 MW (AC) of inverters and 130 MWh of batteries, and for the full year, total shipments were 3,563 MW (AC) of inverters and 576 MWh of batteries. This is, of course, despite the financial challenges, but the shipment volumes show that SolarEdge is still fairly active in its core business.

Furthermore, SolarEdge is updating how it does business and reports its finances. After changing a customer contract, it has also revised how it says it makes revenue and loans in the third quarter of 2024 and has plans to shut down its energy storage business in Korea.

Even though the last few months have been tough, CEO Shuki Nir said that the company is on the right path. SolarEdge showed positive free cash flow in the fourth quarter, which he thinks is a good first step to recovery. The company's management anticipates remaining free cash flow positive in the first quarter of 2025 and so on.

As we look at future numbers, SolarEdge is also predicting revenue in Q1 2025 to be anywhere between $195 million and $215 million. Further, they are expecting their non-GAAP gross margin to improve into a range of 6% to 10%, and that non-GAAP operating expenses will be kept contained in a range of $98 million to $103 million.

Although the company still has a long way to go, it looks to have taken positive steps toward recovery. However, I believe the Q1 this year will give a clear indication of where the company is heading.

Capital Allocation and Balance Sheet History

Over the past decade, SolarEdge has raised and spent capital to expand its business. Notably, in 2018, it moved into energy storage, buying 75% of Kokam (battery cells) for $88 million and acquiring UPS-maker Gamatronic for about $11.5 million. To fund growth and working capital, SolarEdge also tapped the markets. In September 2020, the company sold $550 million of 0% convertible notes due 2025. And in March 2022, it issued 2.0 million new shares at $295 each (grossing ~$590 million) via a secondary offering. Those funds were earmarked for general corporate purposes (including potential acquisitions).

Despite these capital raises, return metrics have lagged. The huge impairments in 2024 drove SolarEdge to a GAAP operating loss of $1.71 billion (versus a $40.2 million operating profit a year earlier). Tangible asset growth has been limited: at year-end 2024, net PP&E was only $343 million, down from $615 million in 2023, largely reflecting the write-downs. In effect, much of the capital “invested” (whether via debt, equity or M&A) was written off as future revenue projections proved too optimistic.

Even in 2023, the balance sheet of SolarEdge showed it to have healthy cash ($274M) and marketable securities ($311M). Still, by early 2025, its cash declined (SolarEdge used $313M in 2024 operating activities, leaving it with $321M of cash combined with marketable securities). Recent capital allocation has not yet reaped a lifetime of returns, based on evidence that ROIC is effectively negative in 2024. So, simply put, SolarEdge arguably put in billions, expanding facilities, doing R&D, even acquiring companies, but those investments continue to really deliver on growth. That is indeed the case, because 2024's tangible assets and operating income were much lower than in preceding years.

Insider Buying Activity

During the past 6–12 months, we have seen that multiple insiders of SolarEdge have bought substantial amounts of stock. Specifically, late in 2024 and early 2025, two of the independent directors, More Avery and Marcel ( "Mariel" ) Gani, purchased shares. On November 13, 2024, Mr. More Avery purchased an additional 156,000 shares at a price of $13.65 and 30,000 shares at a price of $13.70 on March 6, 2025. On Nov 14, 2024, Marcel Gani bought 20,000 shares at $11.43.

Earlier, then CFO Ronen Faier had made a much smaller purchase of 875 shares at $180.10 in August 2023 (during Q2 2023 reports). And none of the senior officers has purchased in recent years at the current low prices. On the whole, the directors' numerous millions of sterling transactions don't cluster around quarterly results. Even when the stock is trading near the decade low, it suggests confidence from long-time insiders, while giving the space for buying on the dip opportunity.

Valuation Looks Reasonable

In terms of valuation, it looks attractive if we look at price-to-sales metrics. It is currently trading at forward P/S 0.68, which is a 70% discount from the sector median of 2.31x. Further, if we look at its historical 5-year average of 4,65x, which gives an 83% discount from current metrics.

The GuruFocus GF value indicator also shows that the stock is trading much below its intrinsic value of $43, which reflects a 258% upside potential from its current price of $12.7 per share.

The deep discount also implies market participants are overly gloomy about the company's near-term performance as revenues fall, write-downs mount, and its operations turn dicey. However, a re-rating opportunity looms after the company executes its opportunity to narrow its margins, cut excess inventory, and return to positive free cash flow. If that happens, the current low valuation will be substantial. On the surface, the near-term financial numbers are weak, but the very strong P/S value suggests the stock is trading at a very cheap multiple relative to historical levels and the industry peers, setting up the opportunity to be a long-term value play for those contrarian investors who believe in its eventual recovery.

Technical Analysis

While looking at technical aspects, we see that the stock price of SolarEdge Technologies currently stands at $13.47 while following a sustained downward trend, which forms a sequence of lower highs and lower lows. Current short-term bearish pressure exists because the stock price stays below the 9-day EMA at $14.01. A major support zone exists between $13.00 and $13.20, and the first resistance level is at the 9-day EMA, as well as the stronger barrier at $15.40 to $15.50, which might be the 50-day or 200-day EMA.

The slope of the long-term trendline confirms the bearish condition for the medium-range price outlook. The current momentum level shows declining strength since the RSI indicator stays below fifty. Any short-lived bear market relief will likely occur after RSI reaches 30, but the stock needs to surpass its 9-day EMA to avoid capped price movement. The market activity shows restrained selling patterns which match the moderate trading volume levels.

Overall, the technical analysis shows that the market has started to move down because of its resistance to move higher. New bullish trends need bulls to establish defender status at $13 support while advancing above $14 to start a shift. A violation of the $13 support would likely push prices to test $12.50.

Summit Ridge Energy Partnership

Having discussed all the negative aspects of the company, I admit that the company has recently achieved some developments that can turn the tables for the company. Firstly, the company made a strategic partnership with Summit Ridge Energy (SRE), a leading commercial solar company, to supply SolarEdge's inverters and power optimizers, which are domestically manufactured in Tampa, Florida.

Through this partnership, SolarEdge will help SRE standardize its rooftop solar installations by providing its inverter solutions. These projects are expected to surpass 100MW in capacity, with SRE projecting ongoing growth as its development pipeline grows. The first shipments from Florida are set to start in April 2025.

Second, major U.S. residential solar installers and financiers, including Sunrun (RUN), have signed safe harbor agreements with SolarEdge to use domestically made inverters, power optimizers, and batteries to aid partners in receiving bonus tax credits. It also made its second 45X Advanced Manufacturing Production Tax Credits sale. Strong U.S. solar market forecasts combined with a 4% CAGR residential rate make SolarEdge a strong competitor against foreign competition.

For SolarEdge, the partnership safeguards a domestic market for its inverter, Power Optimizers, and batteries that will be manufactured in the U.S. This also allows its partners to secure bonus tax credits, making project economics and planning clarity stronger. As a result, SolarEdge can receive predictable revenue streams, have more favorable cash flow, and have more favorable positioning relative to foreign competitors, all useful to the development of the company's financial stability.

Final Words

SolarEdge's outlook is mixed, with both clear risks and possible opportunities. On the risk side, there are sharp revenue declines, Net losses, supply chain disruptions, and new tariffs. The technicals also don't look good, with the price staying below key moving averages and the RSI under 50, showing weak momentum. While recent deals like the safe harbor agreements and tax credit sales give some hope, they aren't strong enough on their own to spark a full recovery. The company's support zone is between $13.00 and $13.20, but if the stock breaks below it, it could quickly slide to $12.50 or lower.

SolarEdge might benefit in the long run from U.S. solar market growth and its domestic production strategy. But right now, the fundamentals haven't improved enough, and there's no clear catalyst to drive the stock higher. The market may be overly negative at this stage, but without a solid reason to buy, the risks outweigh the rewards.

On the potential side, SolarEdge still controls a large share of the solar inverter market and may benefit if conditions improve. Management has signalled that U.S. solar demand may have “bottomed” and could recover as interest rates ease and federal incentives (like the U.S. Inflation Reduction Act) boost installations​. If renewable energy demand picks up and the company's recent restructuring works, SolarEdge could capitalize on its technological strengths.

Finally, SolarEdge carries significant headwinds but also has non‑negligible tailwinds. Its future success will depend on execution and market trends. This balanced perspective simply restates the company's risks and potential without offering any investment advice or firm prediction.