Why SolarEdge Technologies (SEDG) Stock Is Down 20%

Shares of SolarEdge Technologies Inc SEDG dropped 20% to $15.06 during Wednesday’s session. Several solar stocks are trading lower following Donald Trump’s presidential election victory.

The Republican Party's gains across the House and Senate signal a potential shift away from the green energy policies that have bolstered SolarEdge's business model.

Trump's campaign commitments included reducing federal support for renewables and easing regulations on fossil fuel industries, which poses a threat to SolarEdge's growth trajectory and the broader renewable energy sector.

What To Know: Trump's proposed energy agenda includes plans to phase out green energy tax incentives, such as the Federal Investment Tax Credit (FITC), which currently provides a 30% tax credit for solar installations.

Concerns could mount among investors that if Trump repeals or scales back this incentive, it could impact demand for solar installations in the U.S., especially in states that lack their own substantial renewable energy subsidies.

SolarEdge, a leading provider of solar inverters and energy management solutions, relies heavily on the continued expansion of solar power adoption.

With the possible withdrawal of federal tax benefits, SolarEdge could face serious headwinds, as potential customers may be deterred by higher upfront costs in the absence of tax relief, which could stall the company's momentum in a key market.

Read Also: Trump’s Big Tech Policies: What GOP Victory Means For Apple, Google, Microsoft

Impact of Potential Tariffs and Trade Policies: Additionally, Trump's stance on tariffs poses a potential risk to SolarEdge's supply chain. Trump has floated the idea of a universal 10% tariff on all imports, and a possible 60% tariff on Chinese goods could have direct repercussions.

SolarEdge sources some of its key components from international suppliers, particularly in Asia. If such tariffs were enacted, the costs of inverters and other equipment could rise sharply, squeezing the company's margins or forcing it to pass on these costs to consumers, further challenging its competitive positioning in the U.S. market.

What Else: Trump’s previous administration took a deregulatory approach toward environmental policy, rolling back numerous climate and emissions regulations. Given Trump's preference for traditional energy sectors, SolarEdge could see a policy landscape less supportive of renewable energy initiatives and one more favorable to fossil fuels.

Without strong Federal backing, the solar industry may struggle to maintain its current growth, potentially impacting SolarEdge's revenue from its U.S. operations, which constitute a significant portion of its business.

Read Also: S&P 500, Dow Hit Record Highs After Trump Win; Fear Index Drops 20%

Should I Sell My SEDG Stock?

When deciding to hold on to or sell a stock, investors should consider their time horizon, unrealized gains and total return.

Shares of SolarEdge Technologies have decreased by 78.4% in the past year. An investor who bought shares of SolarEdge Technologies at the beginning of the year would take a loss of $76.39 per share if they sold it today. The stock has fallen 17.51% over the past month, meaning an investor who bought shares on Oct. 1 would see a capital loss of $6.33.

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SEDG has a 52-week high of $103.15 and a 52-week low of $14.82.