Enphase Energy brings a system-based, high-tech approach to solar energy,

leveraging expertise in semiconductor integration, power electronics, and

networking technologies to continually advance the performance, intelligence, and
reliability of solar energy systems. To determine whether Enphase experienced an
asset bubble of stock prices, we need to analyze historical data and various factors:
1)Company fundamentals. In 2012 and 2013, Enphase experienced increasing
pricing pressure due to rapidly falling prices in the inverter market. Market leaders
faced market share erosion in the face of newer companies, most of them from the
far east. The company's growth was nothing short of phenomenal.
2)Stock price movement. In the four-year period from 2019 to the end of 2022,
Enphase Energy stock produced a staggering 5,500% return, making it one of the
greatest growth stories on Wall Street. ENPH is down only 13% from all time
highs and has delivered an incredible 242% return over the last two years and
insane 12x return over the last three years.The gross margin has only gotten better.
And the company has gone from barely profitable to extremely profitable ENPH
RPS has increased from $5.16 in 2019 to $20.51 in the last 12 months, implying
297% change.
3)Macroeconomic factors.Demand for home storage systems and microinverters
surged during the third quarter, bucking expectations that it would be difficult for
installers to connect with homeowners during lockdowns caused by the COVID-19
pandemic.However, in 2019, Enphase remains the leading supplier of solar
microinverters globally.Enphase is also making progress on launching what it calls
a grid-agnostic microinverter, meaning it can remain online in the event of a power
disruption. Beta installations are expected in the first quarter of 2021.Enphase beat
the S&P Global Market Intelligence consensus normalized EPS estimate, which
was 24 cents. Enphase reported $205.5 million in revenues in the first three months
of 2020, up 105% from 2019..The company expects second-quarter revenues to
drop to between $115 million and $130 million, with its gross margin holding
steady at 37% to 40%.Enphase Energy, a solar home-energy solutions company,
has seen its stock rise from $26 to $165 off its March 2020 low.Further, the stock
is up almost 3x from the level it was at before the pandemic. However, we believe
that Enphase stock could rise almost 30% to regain its early-2021 high of $215.
Analyzing this data, the company had an asset bubble, which showed a sharp
increase in prices and also a decrease due to the pandemic.
Impact of pandemic on sales make asset bubble:
1)Some industries experienced increased demand and higher sales due to the
pandemic, while others suffered declines. For sectors with increased demand, there
was a potential for asset bubbles to develop, particularly in technology, e-
commerce. If Enphase's increased sales were based on strong fundamentals, such
as rising demand for renewable energy solutions or improved financial
performance, it might be less likely to lead to an asset bubble.
2) Many central banks worldwide lowered interest rates to stimulate economic
activity during the pandemic. Low interest rates can make investing in stocks more
attractive as fixed-income investments yield less
3)Investor sentiment and behavior play a significant role in the formation of asset
bubbles. When investors exhibit exuberance, euphoria, and speculative behavior, it
can lead to bubbles. The pandemic may have fueled such sentiment in some
sectors, while caution prevailed in others.
The impact of the pandemic on asset bubbles is not solely determined by increased
sales. It's a combination of various factors, including market conditions, investor
behavior, central bank policies, and government interventions. Asset bubbles can
develop when speculative forces lead to unsustainable price increases, even in
response to increased sales in certain sectors. Therefore, while increased sales may
be a contributing factor, it doesn't provide a definitive answer regarding the
likelihood of asset bubbles during the pandemic.Consider the broader market and
industry conditions. A surge in clean energy and sustainable technology
investments during the pandemic could contribute to higher stock prices.For
company Enphase the pandemic highlighted the importance of sustainable and
clean energy sources. As people spent more time at home, there was a greater
focus on improving energy efficiency and reducing environmental impact. Overall,
the pandemic's influence on Enphase likely involved a combination of increased
demand for clean energy solutions, government support, and resilience, as well as
challenges related to supply chain disruptions and economic uncertainty.

METRIC Q3 2022 -- Q2 Q3 2021-- Q3 2020 -- Q3 2019 --

2023 Q2 2022 Q2 2021 Q2 2020

QRevenue $2.8 billion $1.74 billion $1.06 billion $721.2

million

Net income $572.6 million $203.2 $183.4 $169.4

million million million

Gross profit $1.23 billion $699.65 $467.67 $271.7

million million million

Gross profit 43.9% 40.3% 44.1% 37.7%

margin