Why SolarEdge Technologies stock rallied this week

Let’s say investors in solar energy company SolarEdge Technologies (SEDG -1.91%) I had a bad year is an understatement. The sharp decline in stocks continued this week. As of midday trading on Friday, SolarEdge shares are down more than 15% this week alone, according to data provided by S&P Global Market Intelligence.

That decline has contributed to a massive 74% drop in SolarEdge shares this year. That erased more than all of the stock’s previous gains after rallying in recent years. The company made a big announcement this week, but that didn’t stop the stock from falling.

The CEO resigns

The big news this week was SolarEdge CEO Zvi Lando deciding to step down from the position. Lando will remain an advisor during the leadership transition and will remain a member of the board of directors. In announcing his resignation, Lando said, “The road to a full SolarEdge recovery is still ahead of us, and driving that recovery at a rapid pace requires new energy and leadership.”

The recovery he refers to comes as sales have fallen for the solar system supplier. Revenue fell 73% in the second quarter from the year-ago period. But on a positive note, sales were up 30% sequentially over the previous quarter.

Business has slowed significantly, especially in Europe, as a high interest rate environment has reduced spending on renewable energy systems. The company said the chief financial officer will serve as interim CEO while the board seeks to fill the position permanently.

Investors do not see this as a good time to add uncertainty to the leadership position in a sluggish market environment. But there are signs that the environment is improving. It will probably be a slow process, though.