Insider buying picked up a bit following a lackluster string of uneventful weeks of activity. Despite some new enthusiasm from executives and institutions, there weren’t many names on the roster that met many of our conditions.
In the absence of overlapping criteria, size becomes the default go to. In our opinion, dollar amounts matter. One-million dollars tells a completely different story than $10,000. The way we see it, the bigger the monetary commitment, the more confidence the buyer exhibits.
Enphase Energy, Inc. (ENPH) Director Thurman Rodgers was one of last week’s biggest spenders. He bought 60,800 shares of ENPH for a total investment of more than $10 million. (1) Enphase Energy is a global energy technology company and the world’s leading supplier of microinverter-based solar-plus-storage systems.
The Company delivers smart, easy-to-use solutions that connect solar generation, storage, and energy management on one intelligent platform. Its semiconductor-based microinverter system converts energy at the individual solar module level and brings a system-based high-technology approach to solar energy generation, storage, control, and management.
Microinverter-based solar-plus-storage systems have seen a growing demand in recent years due to several factors.
Firstly, microinverters offer many advantages over traditional string inverters, which are often used in solar PV systems. Microinverters are installed on each individual solar panel, which allows for greater system flexibility and improved performance. In contrast, string inverters are connected to multiple panels and can only optimize the performance of the entire string, which can lead to decreased performance if one panel is shaded or damaged.
Secondly, the addition of energy storage to solar systems has become increasingly popular as battery technology has improved and become more affordable. Energy storage allows solar PV systems to store excess energy produced during the day for use at night or during times of peak demand, increasing the self-sufficiency of the system and reducing reliance on the grid.
Finally, microinverter-based solar-plus-storage systems offer significant benefits for residential and commercial customers looking to reduce their energy bills and carbon footprint. These systems can help customers to save money on their energy bills and reduce their dependence on fossil fuels, while also providing backup power in the event of a grid outage.
According to Acumen Research and Consulting, “The Global Advanced Energy Storage System Market Size accounted for USD 19.0 Billion in 2022 and is estimated to achieve a market size of USD 48.5 Billion by 2032 growing at a CAGR of 9% from 2023 to 2032.” (2)
While demand for solar storage is likely to be strong for the next decade, ENPH stock just got rocked. Although earnings were better than expected in the first quarter, sales guidance of between $700 million and $750 million for the second was less than Wall Street’s expectations of $773 million. (3)
Prior to releasing its first quarter financial report card after the market close on April 25, 2023, Enphase stock closed at $220.60. The next morning, the stock opened at $178.63 and finished up the day at $163.83. ENPH lost $56.77 (25.73 percent) in 24 hours.
Enphase Energy Director Rodgers pounced, buying the crashing stock on April 26, 2023 in a pair of transactions at $163.76 and $166.88 per share. The stock trades at $164.20 as of the close of trading on Friday, April 28, 2023.
In our view, Rodgers and investors don’t have to think much beyond what Chief Executive Officer (CEO) Badrinarayanan Kothandaraman shared with analysts on the earnings conference call, “Yes. I think the storage volumes are going to go — Q2 is probably the low. They’re going to grow from here on and simply because of one reason. We are going to be introducing batteries to a lot more countries.” (4)
With that context, Rodgers’ $10 million tells a certain story, in our opinion.
OVERALL: Enphase Energy, Inc. (ENPH) long-term prospects are solid. Director Thurman Rodgers’ big commitment and CEO Kothandaraman’s belief that the upcoming quarter could potentially be the low for the company’s current prospects, price weakness could be short lived.
ENPH is only for aggressive investors looking for exposure to the solar storage sector. New shareholders should have a time horizon of at least 18 months; although, Kothandaraman believes the worst could be over sooner.
1 – https://www.secform4.com/insider-trading/1183967.htm
2 – https://www.globenewswire.com/news-release/2023/02/16/2610309/0/en/Advanced-Energy-Storage-System-Market-Size-Growing-at-9-CAGR-Set-to-Reach-USD-48-5-Billion-By-2032.html
3 – https://finance.yahoo.com/news/enphase-energy-forecasts-second-quarter-203919838.html
4 – https://finance.yahoo.com/news/q1-2023-enphase-energy-inc-110049046.html