SolarEdge to be relegated from S&P 500

SolarEdge Technologies Inc. (NASD: SEDG) will be removed from the S&P 500 Index at its next update, two years after being added to the index. The change, which will take place before trading on Monday, December 18, is one of several in the index designed to make it “more representative of its market capitalization range”, S&P Dow Jones Indices stated.

SolarEdge provides solutions to the solar energy industry. Although half of its activity and its headquarters are located in Israel, SolarEdge is registered as a US company, which qualified it for inclusion in the index, which covers US companies only, in the first place.

Since it was added to the index in 2021, when it was traded at a peak market cap of nearly $20 billion, Solar Edge’s share price has declined, against a background of changes in the solar energy industry. The company currently has a market cap of $4.7 billion, and its stock has been the worst performer in the index this year.

SolarEdge will be added to the S&P MidCap 400 Index, along with two other companies that will be relegated from the leading S&P 500: Sealed Air Corp. (NYSE: SEE), and Alaska Air Group Inc. (NYSE: ALK). These companies will be replaced by Uber Technologies Inc. (NYSE: UBER), Jabil Inc (NYSE: JBL), and Builders FirstSource Inc. (NYSE: BLDR).

In a recent interview with “Globes”, commenting on the possibility that the company would be removed from the S&P 500, SolarEdge CFO Ronen Faier said, “We never sought to be included in the index; they notified us when it happened, and we are not completely familiar with all the considerations. You have to understand that this is a market characterized by very high volatility in share prices, even when there is faith in the potential. We would be happy to remain in the index; it’s an exclusive club that we certainly want to be in, but whatever happens, as far as we are concerned, apart from the share price nothing much has changed in the way we see the future.”

Profit warning and weak guidance

This is only the latest blow to SolarEdge’s stock. A month ago, the company had to publish a profit warning ahead of the release of its third quarter financials. This resulted in $1.7 billion being wiped off its market cap in one session.

Momentum in the stock had already been negative in the previous few months, and then when the company released its quarterly financials, it surprised the market with very weak guidance for the fourth quarter, projecting revenue of about half of what analysts covering the company had estimated.

Altogether, the share price is about 78% below the peak recorded in November 2021, and about 71% down for 2023 to date.

Published by Globes, Israel business news – en.globes.co.il – on December 3, 2023.

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