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Troubles Ahead For Enphase In An Increasingly Competitive Industry

Enphase disappointed investors once again with its Q3 earnings call, lowering guidance on several important metrics.

Enphase has had trouble dealing with increasing competition over the past few quarters, especially from its main rival SolarEdge.

While demand for Enphase's solar inverters will likely remain strong due to general industry trends, the company will likely continue to lose market share.

Enphase (NASDAQ:ENPH) has experienced a severe downturn over the past year, which is not surprising given the rise of its main competitor SolarEdge (NASDAQ:SEDG). As leading residential solar companies are starting to deal more exclusively with SolarEdge, Enphase is at an increasing disadvantage in the solar inverter arena. Enphase's Q3 report only reaffirmed the company's growing troubles, as it now expects Q4 revenue of between $62 million-$70 million. Not only is this Q4 revenue forecast far lower than analyst expectations of $111 million, but it also represents a significant slowdown from its Q3.

For a company that had previously been growing at such a rapid rate, this expected revenue slowdown is worrisome. Enphase will also likely face difficulties on the margin front. While Enphase's Q3 gross margin was in-line with expectations, the company's gross margins over the next few quarters will likely lower due to increasing competition. As the solar inverter landscape is becoming more crowded, Enphase will have an increasingly hard time attracting top-tier customers. Despite the fact that Enphase was one of the first major solar inverter companies, it is rapidly losing its competitive advantage in this industry.

Increasing Competition

Enphase was worth approximately...