Key Takeaways

• SolarEdge (SEDG) closed down 9.5% at $36.57 on February 27, trading on approximately half its typical daily volume.
• Solar stocks experienced significant declines, with Sunrun plummeting 35%, Array Technologies falling 34%, and Shoals Technologies dropping 31% following quarterly reports.
• Industry-wide challenges include tariff-related margin compression and reduced federal incentives dampening residential solar adoption.
• While SolarEdge exceeded Q4 earnings expectations, the company continues operating at a loss with a net margin of -34.2%.
• Wall Street maintains a “Reduce” rating on SEDG, with the consensus price target of $27.28 indicating potential downside from current levels.

Shares of SolarEdge Technologies (SEDG) declined 9.5% during trading on February 27, finishing the session at $36.57 compared to the previous close of $40.40.

SolarEdge Technologies, Inc., SEDG

Trading activity was notably subdued, with approximately 1.57 million shares changing hands — roughly half the company’s 3.16 million share average daily volume.

The decline in SEDG wasn’t an isolated event. The entire solar industry experienced significant downward pressure throughout the week.

Sunrun plummeted 35% following its earnings announcement. Array Technologies saw shares drop 34%. Shoals Technologies declined 31%. First Solar fell 14%. The Invesco Solar ETF registered an 8% loss for the week — marking its steepest five-day decline since June.

This widespread selloff signals fundamental challenges facing the industry rather than temporary market volatility.

Tariff pressures are compressing profit margins at companies including First Solar, Array, and Shoals, with each citing these impacts during quarterly earnings discussions. Changes to federal energy policy have reduced financial incentives for consumers, while demand in the residential solar market shows signs of deterioration.

According to Wood Mackenzie forecasts, U.S. residential solar installations are projected to contract by 18% in 2026.

Sunrun’s quarterly results provided evidence of this declining trend. The company reported a 17% year-over-year decrease in new subscribers during Q4 2025 compared to Q4 2024, while the net value per new customer fell 30% in the period. The company’s 2026 outlook further dampened investor confidence — Jefferies analyst Julien Dumoulin-Smith downgraded the stock from Buy to Hold, pointing to expectations for “a more prolonged period of market contraction.”

First Solar’s Contract Backlog Signals Industry Headwinds

First Solar’s contract backlog declined to 50.1 gigawatts by year-end 2025, representing a significant drop from 68.5 gigawatts at the beginning of the year.

The company experienced more contract cancellations and terminations than new bookings during the quarter — marking the seventh straight quarter of declining backlog, according to Raymond James analyst Bobby Zolper.

Zolper observed that the company’s 2026 and 2027 projections fell approximately 15% short of earlier expectations across key metrics including shipment volumes, revenue, and EBITDA. He maintained a Market Perform rating, stating he would “wait out the near-term negatives.”

SolarEdge Posted Better-Than-Expected Results

Despite the share price decline, SolarEdge delivered fourth-quarter results that surpassed analyst forecasts. The company reported an adjusted EPS loss of $0.14, narrower than the anticipated loss of $0.19. Quarterly revenue reached $333.8 million, exceeding the $330.33 million consensus estimate and representing a 70.9% increase year over year.

However, profitability remains elusive. The company’s net margin stands at -34.2% with return on equity at -45.5%.

Wall Street’s view on SEDG leans bearish. The consensus recommendation is “Reduce,” comprising one Buy rating, 16 Hold ratings, and seven Sell ratings. The average analyst price target of $27.28 sits below the stock’s current trading range.

Recent analyst activity includes Deutsche Bank lowering its price target from $35 to $33 while maintaining a Hold rating on February 20, and Morgan Stanley increasing its target from $33 to $40 with an Equal Weight rating on February 19.

The stock’s 50-day moving average stands at $33.76, while the 200-day moving average is $34.19. SEDG maintains a market capitalization of approximately $2.06 billion with a beta coefficient of 1.66.

Institutional ownership accounts for 95.1% of outstanding shares.

Ethereum continues to host the largest concentration of stablecoins and decentralized finance (DeFi) capital, even as successive waves of faster networks emerge.

Newer blockchains have promised higher throughput and lower costs, raising questions about whether institutional capital could eventually migrate away from Ethereum.

Kevin Lepsoe, founder of ETHGas and a former Morgan Stanley derivatives executive in Asia, said he expects Ethereum’s lead to endure, as institutions tend to prioritize capital depth over flashy performance.

“[Transactions per second] is the metric that gets engineers excited, but is that what drives capital to the blockchain?” Lepsoe asked in an interview with Cointelegraph.

“The capital is on Ethereum; the stablecoins are there. TradFi is looking at where the liquidity is,” he said.

Institutional capital brings scale and stability to a blockchain’s ecosystem. Large asset managers and tokenized fund issuers move capital in volumes that deepen liquidity and anchor stablecoin supply. Their presence can establish a network’s position beyond hype-driven retail activity that surges in bull markets and fades in downturns.

Liquidity keeps Ethereum ahead of faster rivals

If institutions prefer to operate where most of the money already sits, then simply making a faster blockchain will not pull capital away from Ethereum.

Over the past several cycles, performance has become a weapon to attract users. Solana has emerged as Ethereum’s high-speed alternative, dubbed an “Ethereum killer,” though that label is debated. It onboarded retail traders through the non-fungible token (NFT) boom and the memecoin frenzy, but the heightened activities weren’t sustained in the long run.

Related: Can Solana shed its memecoin image in 2026?

Solana now has its own generation of “Solana killers” that advertise higher theoretical transactions per second (TPS). But Ethereum’s liquidity grants tighter spreads, lower slippage for large trades and the capacity to absorb institutional-sized transactions without heavily distorting prices.

“I think of Ethereum as like downtown,” Lepsoe said.

“You could build a marketplace uptown somewhere in the suburbs and you could get far off market prices there, maybe it’s more convenient or maybe you like the vibe. But if you want the deepest liquidity, you go downtown, and that’s Ethereum.”

Though past crypto booms featured high-stakes retail speculation, the next phase is shaping up to include more institutional capital. As it stands, institutional players have expressed interest in practical use cases such as stablecoins and real-world assets (RWAs).

Even the world’s largest asset manager is leaning into RWA products. BlackRock’s USD Liquidity Fund (BUIDL) is its tokenized Treasury fund that started on Ethereum and branched out to several blockchains. Ethereum holds over a 30% BUIDL market capitalization.

Ethereum is the largest network for stablecoins as well, which BlackRock’s global head of market development, Samara Cohen, said are “becoming the bridge between traditional finance and digital liquidity.”

Ethereum leads the industry in stablecoin market cap, with $160.4 billion, according to DefiLlama.

Ethereum’s L2 liquidity is returning to L1

Though Lepsoe said liquidity depth shapes institutional preference, a network’s efficiency cannot be completely disregarded.

Ethereum has been adjusting its own technical profile. Transaction fees that once routinely spiked to virtually unusable prices have fallen significantly, as layer-2 rollups eased pressure on the main chain. These solutions brought in new problems of their own. Rollups fragmented liquidity across multiple environments.

Related: 2026 is the year Ethereum starts scaling exponentially with ZK tech

Lepsoe described the liquidity fragmentation as a blessing in disguise for Ethereum. He argued that if L2s didn’t take away liquidity from the main chain, capital would have flown out to competitors.

“I think it actually saved the liquidity from going to other L1s, where they eventually probably couldn’t have brought it back,” he said.

Recently, Ethereum has shifted its focus back to scaling the main chain. Co-founder Vitalik Buterin said that many layer 2s have failed to decentralize, while the main chain is now sufficiently scaling.

“Both of these facts, for their own separate reasons, mean that the original vision of L2s and their role in Ethereum no longer makes sense, and we need a new path,” Buterin said in a recent X post.

Scaling upgrades strengthen Ethereum’s liquidity advantage

With transaction fees tamed, Ethereum is expected to execute the Glamsterdam fork in 2026, raising the block gas limit to 200 million from 60 million and putting its layer 1 on the road to 10,000 TPS over time.

For Ethereum, the timing coincides with institutions evaluating blockchain infrastructure for the next generation of financial services.

Alongside protocol upgrades, infrastructure providers are experimenting with ways to improve execution efficiency. Projects like Lepsoe’s ETHGas aim to optimize Ethereum’s block construction process through offchain execution and coordination, while Psy Protocol uses zero-knowledge technology to bundle multiple transactions into one.

Marcin Kaźmierczak, co-founder of blockchain oracle RedStone — which supplies data feeds for tokenized assets and institutional blockchain applications — said that Ethereum has the edge, as institutions prefer blockchains that have been battle-tested and around “for a very long time.” However, while institutions are “aggressively” expanding into Ethereum, they’re also shopping around.

“They look at Solana, which is getting good traction. Canton is extremely important for them because it gives them privacy, which they value very, very much,” Kaźmierczak told Cointelegraph.

Lepsoe said he sees “zero threat” from Solana or Canton, arguing that Ethereum still has the deepest liquidity pool, which is the primary draw for large allocators.

For institutional capital, performance improvements may expand Ethereum’s capacity, but liquidity remains its defining advantage. In blockchain markets, speed can attract users during booms, but capital tends to stay where the deepest markets already exist.

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