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Solar inventories are being slammed as supply chains enter clean energy market bottlenecks

Solar stocks fell on Tuesday, adding to recent losses, as businesses expressed concern over supply chain bottlenecks and parts shortages.

The Invesco Solar ETF, which monitors the space industry, fell 7%, taking its one-month loss to 15%.

SolarEdge experienced the biggest fund loss with a 15% decline. On Monday evening, the firm released its earnings. Although the company’s top and bottom-line performance beat market estimates, SolarEdge cautioned that higher freight costs would erode margins in the future.

“Ocean freight prices have increased by more than 100% over the last months and our pre-negotiated prices have gradually expired and exposed us to higher freight costs worldwide,” Zvi Lando, the company’s Chief Executive Officer, said on the earnings call.

However, the company stated that it has sufficient supplies to satisfy demand in the second half of the year. This is in comparison to rival Enphase Energy, which announced last week that the global chip shortage would limit its second-quarter shipments.

Both battery storage and solar inverters depend heavily on semiconductors. The shortage has also impacted the car industry, with GM and Ford slashing production at many plants as a result of the shortage.

On Tuesday, SolarEdge’s weakness extended to the rest of the market, as investors worried that businesses wouldn’t be able to keep up with rising demand.

EnPhase and SunPower decreased by over 7% and 10% and 8% have been shed by Sunrun and Sunnova.

Sunnova announced earnings for the first quarter of April 28 with updated figures of EBITDA, and the firm also reported that parts were stored until shortage fear was observed. Nevertheless, over the last week, the shares have decreased by over 20%.

The results are scheduled for SunPower and Sunrun. However, some analysts on Wall Street continue to be bullish about the market, noting that the long-term outlook remains high amid the near-term storms.

“The developments in demand are encouraging and we agree that long-term buyers can purchase stock weakness in advance of anticipated supply shortages increases in the coming quarters,” said JPMorgan.

On Tuesday the company also made a success in the wider business sales. As funds pulled out of high-growth equity sectors, The Nasdaq composite was the loser of the largest indexes and was down more than 2.6 percent.

In 2020, the Invesco Solar Fund earned 233%, outperforming 16% of the S&P 500. The Fund fell 25% in 2021, and S&P 500 fell 10% in 2012.

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