A class action lawsuit was filed against Enphase Energy, Inc. (NASDAQ:ENPH) on May 29, 2024. The plaintiffs (shareholders) alleged that they bought ENPH stock at artificially inflated prices between February 7, 2023 and April 25, 2023 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Enphase Energy stock during that period can click here to learn about joining the lawsuit.
Enphase Energy is a global energy management company that offers technology solutions for solar generation, storage, and energy management. It designs, develops, and manufactures microinverter-based solar-plus-storage systems. The company markets its solutions to solar distributors, large installers, original equipment manufacturers, strategic partners, and homeowners.
Enphase Energy’s Misleading Claims
The plaintiffs maintain that Enphase Energy and two of its senior officers (Individual Defendants) deceived investors by repeatedly making false and misleading public statements about the company’s business practices and prospects during the Class Period.
As per the complaint, in the press release announcing the Q4 and full-year Fiscal 2022 results, ENPH stated that it was adding further manufacturing capacity of microinverters in the U.S. owing to solid demand for its offerings. The company also wanted to benefit from the incentives under the Inflation Reduction Act (IRA), which encourages domestic production.
The company added that it planned to start domestic manufacturing with a new partner in Q2 FY23 and also with two existing contract manufacturing partners in the second half of 2023. Furthermore, the CEO stated in the related earnings call that the company planned to begin manufacturing at the Flex factory in Romania, to easily cater to European customers and ramp up its production. With the combined increase in manufacturing capacity in both the U.S. and Europe, the company hoped to boost its total global quarterly capacity to more than 6 million microinverters exiting Q1 2023 from 5 million in Q4 FY22.
Here’s How the Truth Was Revealed
The lawsuit accuses the Defendants of omitting truthful information about several key issues, including but not limited to a decrease in battery shipments to Europe and California, from SEC filings and related material. Accordingly, the Defendants allegedly caused the Enphase Energy stock to trade at artificially inflated prices during the time in question.
The information became clear on April 25, 2023, when the company related its Q1 FY23 results. The company noted that U.S. sales declined by 9% sequentially owing to seasonality and macroeconomic conditions. Moreover, the company guided for disappointing Q2 revenues in the range of $700 to $750 million.
Enphase Energy shares have lost over 62% since January 2023, causing massive damages to shareholders’ returns.
