Shares of Shoals Technologies Group (NASDAQ: SHLS) plummeted 13.44% in pre-market trading on Tuesday following the release of the company's third-quarter 2025 earnings report. Despite posting strong revenue growth, the solar energy equipment maker's earnings per share fell short of analyst expectations, sparking concerns among investors.

Shoals reported Q3 revenue of $135.8 million, representing a robust 32.9% year-over-year increase and surpassing the analyst consensus estimate of $131.4 million. However, the company's adjusted earnings per share came in at $0.12, missing the analyst expectation of $0.13. The earnings miss, coupled with increased legal expenses and potential margin pressures, appears to have overshadowed the revenue beat in investors' minds.

While Shoals highlighted positive developments, including a record backlog and awarded orders of $720.9 million, the market seems focused on near-term challenges. The company reported higher general and administrative expenses, driven by a $5.7 million increase in legal costs related to ongoing matters. Additionally, although gross margin improved to 37.0% from 24.8% in the prior-year period, this was largely due to the absence of warranty expenses that had impacted the previous year's results. The company's outlook for the full year 2025, with revenue projected between $467.0 million and $477.0 million, suggests continued growth but may not have been enough to allay investor concerns about profitability and legal expenses.