Shares of Enphase Energy (ENPH) plummeted 8.71% in pre-market trading on Wednesday following the company's second-quarter earnings release. Despite beating analyst expectations for Q2, the solar microinverter maker's weak third-quarter revenue guidance and concerns about future market conditions sparked a significant sell-off.

Enphase reported adjusted earnings per share of $0.69 for Q2 2025, surpassing the analyst estimate of $0.62. Revenue came in at $363.2 million, also beating the expected $359.6 million. However, the company's outlook for the third quarter fell short of market expectations, with projected revenue between $330 million and $370 million, below the consensus estimate of around $370 million.

Adding to investor worries, Enphase management projected a potential 20% contraction in the U.S. solar market's total addressable market for 2026, primarily due to the expiration of certain tax credits. The company also cited a 3% to 5% negative impact on gross margins due to reciprocal tariffs, particularly affecting battery components. In response to these challenges, several analysts, including those from TD Cowen, Oppenheimer, and Morgan Stanley, lowered their price targets for Enphase stock, further contributing to the downward pressure.