Solar ETFs Shine After Enphase's Record Q3 Beat | ETF Trends

Solar sector exchange traded funds jumped on Wednesday after Enphase Energy Inc. (ENPH) revealed third quarter earnings that were well above expectations.

On Wednesday, the Invesco Solar ETF (NYSEArca: TAN) advanced 5.0% and the Global X Solar ETF (RAYS) increased 4.7%.

Meanwhile, Enphase shares surged 24.7% on Wednesday. ENPH makes up 11.4% of TAN’s underlying portfolio and 7.3% of RAYS’.

Enphase shares rallied on Wednesday after the company showed record revenue during the third quarter, despite ongoing headwinds from supply chain bottlenecks, CNBC reports.

“Overall, it was a strong quarter, as higher logistics costs were offset by pricing increases and cost management and microinverter demand continues to outstrip supply,” Citi wrote in a note.

The solar panel and backup energy storage maker posted sales of $351.5 million for the third quarter period, compared to the analyst expectations of $345 million. Additionally, revenue rose 11% quarter over quarter, or nearly double the $178.5 million earned for the third quarter of 2020.

Looking ahead, the company issued upbeat guidance, projecting fourth quarter revenue to rise to between $390 million and $410 million, compared to analyst expectations for revenue guidance of $373.6 million, according to StreetAccount.

While business remains robust, Enphase, like other companies across sectors and industries, continues to face supply chain hurdles. The company had turned to qualified alternate suppliers during the quarter to meet the rising demand, and it also utilized airships for some microinverters. These new supply chains also contributed significantly to increased costs, and along with ocean freight rates rising by eight times, the company opted to pass some costs to the consumers. The company will continue to raise prices for the fourth quarter as well.

“Every component in the supply chain is stressed,” CEO Badri Kothandaraman told CNBC. “It is all hand to mouth…every cost is going up and that’s happening right now.”

“The situation is dynamic. What’s happening on logistics tomorrow may be totally different…the situation is changing every day,” Kothandaraman added.

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