IPO Price Drops at Solar Firm Enphase

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Problems in the solar PV market are well-known. Oversupply has led to a price drop of around 50% for modules, governments are cutting subsidies, and systems are still too expensive.

Enphase Energy Inc. makes a device called a microinverter that converts DC to AC at the solar cell level, not at the system level as has been common in solar PV systems for the past 20 years. The company first filed for an IPO last June and just over a week ago Enphase set a price range of $10-$12/share for its IPO. Today the company filed another amended Form S-1 lowering the IPO price range to $6-$7/share. Enphase still plans to sell about 7.27 million shares at its IPO. The stock will trade on Nasdaq under the symbol ‘ENPH’.

The price drop almost surely reflects investors wariness about the market for solar PV, and especially the incorporation of a newer technology like microinverters into the mix. Microinverters are expected to garner just 2% of the total market for inverters by 2015, and the total value of that market is just $1.5 billion. Enphase and a competitor, SolarEdge, currently account for 40% of the market, hardly a dominating position for either one.

At today’s IPO pricing, Enphase is looking to raise about $44-$51 million, down from the earlier range of $72-$87 million, before expenses and over-allotment options. The company has raised about $115 million in venture funding, so unless the IPO price falls further it seems pretty likely that the company will proceed with offering. But it’s not going to be what either the company or the venture firms had been hoping for.

Today’s filing is available here.

Paul Ausick