4 Reasons Enphase Downtrend Won’t End in 2025; 1 That It Will

Key Points

• Enphase is an in-demand business whose stock is trending lower and will likely hit fresh lows as 2025 progresses.
• Short interest is high, institutions are selling, and analysts have reduced their price targets and sentiment ratings in the first half of the year. 
• The balance sheet is strong and allows for share repurchases, which reduce the count and suggest a bottom will eventually be reached.

Enphase NASDAQ: ENPH is a good company with a solid product that the solar power industry needs. Its microinverter products allow smaller businesses and homeowners to harness the sun's power efficiently. They maximize output for solar panel arrays, allowing each panel to operate independently of the others. However, forces in place will keep this stock moving lower in 2025, so investors should be cautious in their approach.

The stock is already down 85% from its highs and trading at multiyear lows, and it is set to move even lower as the year progresses. 

The stock price is set up for a technical decline. The market is in a clear downtrend, with all major EMAs pointing lower, and other indicators, including stochastic and MACD, are set up for a bearish trend-following entry. In this scenario, the 10% price plunge catalyzed by the Q1 release and guidance update is just the beginning of a much larger decline. 

Investors Eye Long-Term Potential Despite Short-Term Setbacks

Enphase had a solid Q1 2025 with revenue growing by 35.2% to $356 million. Profitability was also solid with adjusted EPS of $0.68. The problem is that revenue and earnings were both short of MarketBeat’s reported consensus despite the low bar set by analysts. 100% of analysts tracked reduced their estimate for the quarter.

The worst news is that the guidance was also adjusted, leaving the forecast below consensus estimates and potentially more optimistic. The company assembles/manufactures about 33% of its product in the U.S. and is working to move production outside of China, but it is still tied to that country and exposed to tariffs. 

The Analysts Are Optimistic, But Optimism Is Fading 

The 31 analysts tracked by MarketBeat are optimistic regarding Enphase stock.

They rate it as a Hold with a bullish bias and expect it to advance by about 50% at the consensus. However, the optimism is fading, and the trend continues after the Q1 release and guidance update.

The consensus target is down nearly 50% over the past year, with recent and post-release revisions pushing it toward the lower end of the range.

That puts the stock near $45, marking a 45% decline from its pre-release close. In terms of sentiment, analyst ratings were downgraded from Moderate Buy to Hold in late 2024 and have continued to deteriorate through calendar Q2 2025.

Short Interest Is High—and Likely to Stay Elevated

The short interest in Enphase is down from its peak set last year, but don’t expect a short-covering rally soon. The short interest at the end of March, about 13%, was still elevated relative to historical norms and sufficient to keep this market lower. The risk in Q2 is that short interest will build, increasing the downward pressure on price action. There wasn’t one in the Q1 release regarding a catalyst for short-covering. 

Institutional Activity Offers Little Hope for Market Reversal in Q2

Institutions own more than 70% of the solar stock, providing a powerful market force. The force is bearish in H1 2025, with sellers outpacing buyers, and that trend is unlikely to change given the Q1 updates. The likely scenario is that institutions will continue to sell to reduce exposure or adopt a wait-and-see attitude, allowing short-sellers to drive the price down before recommitting any capital. 

Healthy Balance Sheet Supports Long-Term Operations

The single reason to think that Enphase’s market can regain traction in 2025 is the cash flow and balance sheet. The company’s revenue and earnings growth allow it to sustain a healthy balance sheet and repurchase shares. The share count fell by more than 2.2% in F2024 and continues to decline in 2025.

The remaining authorization is sufficient to continue repurchases at a semi-aggressive pace and will likely be increased once completed.