Solar stocks including SolarEdge (SEDG), Enphase Energy (ENPH), Sunrun (RUN), and SunPower Corporation (SPWR), are under pressure Friday afternoon as SolarEdge slashed its guidance and warned of softening demand in Europe. Truist Equity Research Analyst Jordan Levy joins Yahoo Finance Live to discuss what is impacting solar demand in the United States and Europe.

“There’s two aspects of it,” Levy says,”Europe is going through this phase of destocking of inventory on the solar side… where a lot of the distributors there loaded up on solar panels at a high cost last year into this year and those prices have plummeted. And now they’re left with a lot of excess inventory on all their equipment.” Levy notes that “the other component of that is the rate phenomenon… is global in that, you know, these are large capital purchases, even if they are less expensive in Europe than the U.S., that still can have an impact on the homeowners considering whether to purchase these or not.”

Levy explains three things that are hitting U.S. demand. “The real impacts to the U.S. are by and large rates are the most important thing hitting demand,” as well as California’s net metering policy change and “this kind of abnormal year where energy, utility prices have sort of stabilized or even come down in some instances.”

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