Credit: Image source: Getty Images.What happened
Shares of SolarEdge Technologies Inc. (NASDAQ: SEDG) plunged as much as 17.5% in trading Friday after the company reported second-quarter earnings. There wasn't much of a recovery late in the day, and shares were down 15.3% as of 3:40 p.m. EDT.
So what
Revenue rose 67% to $227.1 million, and net income was up 53% to $34.6 million, or $0.72 per share. On a non- GAAP basis, which pulls out one-time items, earnings were $0.82 per share, which fell well short of the $0.90 expected by Wall Street.
Image source: Getty Images.
Third-quarter guidance was for revenue of $230 million to $240 million, which is better than the $227.9 million expected by analysts, but that didn't ease investor fears too much.
Now what
One of the challenges with high growth stocks is that investors don't know quite how fast they will grow. In this case, SolarEdge is growing extremely quickly at 67%, and earnings are surging as well. But analysts and investors had been pricing in a higher rate of growth, so there's nothing fundamentally wrong with the business . Investors had just priced in too much growth previously, and that's why shares are falling to earth.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
