Enphase Energy Stock Crashes As Tax Credits Face Axe

Enphase Energy (NASDAQ: ENPH) shares plunged 16% in after-hours trading on Monday, June 16, following the release of proposed amendments to President Trump’s tax plan by Senate Finance Committee Republicans. These changes aim to phase out solar, wind, and other energy tax credits by 2028—posing yet another setback for the already beleaguered solar energy firm. Enphase is not alone in this decline. SunRun saw its stock fall 27% in extended trading, while First Solar declined 11%. Also see – What’s Behind Enphase Energy’s Stock Collapse?

The timing of this policy proposal is particularly problematic for Enphase, which is already grappling with significant headwinds in the U.S. residential solar market. Elevated interest rates have cooled consumer demand for solar installations, and recent regulatory adjustments in California—the country’s largest solar market—have drastically curtailed net metering incentives. These changes reduce the financial benefits homeowners receive for exporting surplus power to the grid, weakening the appeal of investing in home solar systems. For those seeking less volatile returns, the High Quality portfolio has outpaced the S&P 500, delivering over 91% returns since inception. Also see – Should You Buy CRWV Stock After A Whopping 4x Rise?

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Financial Performance Reveals Underlying Weakness

The latest drop adds to Enphase’s steep downward trend, with the stock down 62% over the past year. This prolonged slide reflects deeper operational issues beyond just policy risks.
Enphase has achieved average revenue growth of 6.5%, slightly ahead of the S&P 500’s 5.5%. However, this modest lead is underwhelming for a firm in what was once seen as a high-growth technology space.

The company’s 10.7% operating margin trails the S&P 500’s 13.2% by 250 basis points, indicating persistent inefficiencies despite Enphase’s leadership in solar technology.

In addition, the stock has exhibited weak performance during broader market pullbacks, as detailed in our Buy or Sell Enphase Energy stock dashboard. This suggests limited investor confidence and a lack of defensive characteristics commonly found in utility-adjacent sectors.

Valuation Disconnect

Despite these fundamental challenges, Enphase is trading at a valuation of 3.8 times trailing twelve-month revenue, compared to 3.0 times for the S&P 500. This premium appears misaligned with the company’s weak financials, implying potential for further downside as investors reevaluate risk-reward dynamics.

The intersection of adverse policy shifts, saturation in core markets, and execution-related concerns makes for a tough outlook for Enphase. The proposed end of renewable energy tax credits by 2028 introduces long-term uncertainty, while the company’s elevated valuation offers limited downside cushion. This is why we apply a risk-adjusted approach in curating the Trefis High Quality (HQ) Portfolio, a group of 30 stocks that has consistently outperformed the S&P 500 over the past four years. Why? These HQ Portfolio stocks tend to offer higher returns with lower volatility—less of a roller-coaster ride, as shown in the HQ Portfolio performance metrics.

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