RADNOR, Pa.--(BUSINESS WIRE)--The law firm of Kessler Topaz Meltzer & Check, LLP informs investors that the firm has filed a securities fraud class action lawsuit against Enphase Energy, Inc. (NASDAQ: ENPH) (“Enphase” or the “Company”) on behalf of all persons and entities who purchased or otherwise acquired Enphase common stock between April 25, 2023, and October 22, 2024, inclusive (the “Class Period”). This action, captioned The Trustees of the Welfare and Pension Funds of Local 464A - Pension Fund v. Enphase Energy, Inc., et al., Case No. 3:24-cv-09038, was filed in the United States District Court for the Northern District of California.
Important Deadline Reminder: Investors who purchased or otherwise acquired Enphase common stock during the Class Period may, no later than February 11, 2025, move the Court to serve as lead plaintiff for the class.
CONTACT KESSLER TOPAZ MELTZER & CHECK, LLP:
If you suffered Enphase losses, you may CLICK HERE or go to: https://www.ktmc.com/new-cases/enphase-energy-inc-class-action?utm_source=PR&utm_medium=link&utm_campaign=enph&mktm=r
You can also contact attorney Jonathan Naji, Esq. of Kessler Topaz by calling (484) 270-1453 or by email at info@ktmc.com.
DEFENDANTS’ MISCONDUCT
Enphase develops, manufactures, and sells solar microinverters, which are primarily used in residential solar installations to convert solar panel output from direct current to alternating current (which can be transmitted to the power grid). As is relevant here, Enphase’s international revenue has been growing in recent years as the Company expands globally, particularly in Europe, with international revenue accounting for more than 35% of the Company’s total revenue in 2023.
Prior to the beginning of the Class Period, Chinese solar companies were significantly disrupting the European solar inverter market by selling or “dumping” their products at extremely low prices, a fact highlighted by Morgan Stanley Research on April 24, 2023, when it reported that Chinese inverter export value increased 156% year-over-year internationally, with the Netherlands and Germany—two of Enphase’s key markets in Europe—showing year-over-year surges of 342% and 330%, respectively.
The Class Period begins on April 25, 2023, when the Company announced its first quarter 2023 financial results. Among other things, Enphase reported an approximately 25% year-over-year increase in European revenue. During the accompanying quarterly investor earnings call held that same day, Defendant Badrinarayanan Kothandaraman, the Company’s President and Chief Executive Officer, touted that Enphase’s “European business is growing rapidly,” with “sell-through of our microinverters in Europe reach[ing] an all time high” in the quarter. When asked specifically about competition in Europe from Chinese manufacturers and the risk of margin erosion caused by price deflation from those competitors, Defendant Raghuveer Belur, a Company co-founder and the Company’s Senior Vice President and Chief Products Officer, dismissed such concerns, stating that “[c]ompetition is strong everywhere” and is “nothing new [in Europe],” while Defendant Kothandaraman claimed that Enphase does not “see any drop in [it’s] pricing.”
Investors began to learn the truth about Enphase’s competitive challenges in Europe after the market closed on October 26, 2023, when the Company reported an approximately 34% quarter-over-quarter decline in European revenue in the third quarter of 2023 due to “softening in demand.” During the accompanying quarterly investor earnings call held that same day, Defendant Kothandaraman was adamant that the Company would not adjust its pricing strategies, despite countervailing competitive market forces, emphasizing that “there’s no broad-based pricing adjustment from us.”
In response to the decline in European revenue and Defendant Kothandaraman’s unwillingness to consider pricing adjustments, analysts at BofA Securities reiterated their underperform rating on the stock and criticized the Company for refusing to cut prices to pursue market share, as “competitive risks” endured in Europe. On this news, the price of Enphase common stock declined $14.09 per share, or nearly 15%, from a close of $96.18 per share on October 26, 2023, to close at $82.09 per share on October 27, 2023.
Throughout the remainder of the Class Period, Defendants continued to downplay the competitive threats in the European solar inverter market and reassured investors that Enphase’s European pricing strategy was sound.
Investors fully learned the truth about Enphase’s competitive positioning in Europe after the market closed on October 22, 2024, when the Company announced its third quarter 2024 financial results and revealed an approximately 15% quarter-over-quarter decline in European revenue due to “further softening in European demand.” During the accompanying quarterly investor earnings call held that same day, Defendant Kothandaraman was again asked whether, in light of the Company’s weakness in Europe, Enphase would alter its pricing strategy. While he acknowledged that the Company had occasionally made customer-specific price concessions, Defendant Kothandaraman reiterated that “we are not dropping pricing anywhere,” despite prevailing competitive headwinds.
In response to Enphase’s continued poor performance in Europe, Guggenheim downgraded Enphase stock to a sell rating from a neutral rating and explained that Enphase is “losing share to Chinese competitors who are willing to sell at less than half [Enphase]’s level.” On this news, the price of Enphase common stock declined $13.76 per share, or nearly 15%, from a close of $92.23 per share on October 22, 2024, to close at $78.47 per share on October 23, 2024.
WHAT CAN I DO?
Enphase investors may, no later than February 11, 2025, move the Court to serve as lead plaintiff for the class, through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member. Kessler Topaz Meltzer & Check, LLP encourages Enphase investors who have suffered significant losses to contact the firm directly to acquire more information.
WHO CAN BE A LEAD PLAINTIFF?
A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. The lead plaintiff is usually the investor or small group of investors who have the largest financial interest and who are also adequate and typical of the proposed class of investors. The lead plaintiff selects counsel to represent the lead plaintiff and the class and these attorneys, if approved by the court, are lead or class counsel. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
ABOUT KESSLER TOPAZ MELTZER & CHECK, LLP
Kessler Topaz Meltzer & Check, LLP prosecutes class actions in state and federal courts throughout the country and around the world. The firm has developed a global reputation for excellence and has recovered billions of dollars for victims of fraud and other corporate misconduct. All of our work is driven by a common goal: to protect investors, consumers, employees and others from fraud, abuse, misconduct and negligence by businesses and fiduciaries. For more information about Kessler Topaz Meltzer & Check, LLP please visit www.ktmc.com.
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