Solaredge Technologies (SEDG) saw its shares plummet sharply on Monday following news of another significant round of layoffs.
The company’s CEO Zvi Lando sent a letter to employees on July 15, detailing plans to lower the company's cost structure due to a market downturn, excess inventory, and sluggish demand.
The plan includes reducing the workforce by approximately 400 employees, with 200 of those positions in Israel.
SEDG shares fell nearly 13% after the market open.
Lando mentioned ongoing uncertainty and lower installation rates in Europe, though SEDG is beginning to see improvement in the U.S.
"We estimate the 400 employee headcount reduction represents 8.5% of the workforce and follows a 16% (900 employee) reduction announced in January,” RBC Capital Markets commented.
“SEDG continues to respond to macro demand challenges that are more prolonged than it originally anticipated."
Solaredge’s moves advance the company's restructuring efforts, which saw a 16% reduction in headcount (around 900 employees) in the first half of 2024. This previous reduction was linked to ending manufacturing in Mexico, scaling back operations in China, and eliminating the light commercial e-mobility business.
In Europe, the company highlighted considerable uncertainty and variability between different countries, though there is some slight growth in North America. According to RBC Capital Markets, it is possible that this workforce reduction is a precursor to further manufacturing plant closures as SolarEdge (NASDAQ:SEDG) seeks to balance inventory levels and return to free cash flow generation.
As of Q1 2024, inventories were approximately $1.5 billion, which analysts estimate is a year's supply at the current demand levels.
The market value of SolarEdge has now plummeted to $1.8 billion, a significant decline from its peak of $20 billion in August 2022, when it held the title of the Israeli company with the highest market cap.