What Happened?
Shares of home energy technology company Enphase (NASDAQ: ENPH) fell 27.5% in the morning session after a U.S. Senate panel proposed phasing out solar and wind energy tax credits by 2028, raising concerns about future profitability and project viability for solar companies.
The phasing out is expected to start as early as 2026, diminishing the financial incentives that have been critical drivers of growth in the renewable energy sector.
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What The Market Is Telling Us
Enphase’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. But moves this big are rare even for Enphase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 26 days ago when the stock dropped 18.8% on the news that a GOP bill was passed to end some of the tax benefits granted to clean energy companies during the Biden administration.
The "tax and spending bill", which narrowly passed the House of Representatives, targeted major elements of the Inflation Reduction Act, aiming to significantly reduce or eliminate tax credits for wind, solar, and electric vehicles years earlier than planned.
The immediate concern was the potential for reduced financial incentives that have spurred investment and growth in the renewable energy sector. The prospect of an accelerated phase-out of these crucial tax credits was likely affecting investor confidence, leading to a sell-off in solar companies.
Enphase is down 52% since the beginning of the year, and at $34.22 per share, it is trading 72.3% below its 52-week high of $123.65 from August 2024. Investors who bought $1,000 worth of Enphase’s shares 5 years ago would now be looking at an investment worth $876.50.
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