SolarEdge's (SEDG:US) preliminary third-quarter results disappointed the market, leading to around 26% drop in its stock price in early Friday trade.

This underperformance was attributed to canceled and delayed orders. The negative stock reaction also had a ripple effect on other solar stocks, with Enphase Energy (ENPH:US) and Sunrun (RUN:US) experiencing significant declines in their stock prices as well.

SolarEdge's preliminary third-quarter revenue of $720 million to $730 million fell short of the average analyst estimate, which was projected to be $906 million. The company's gross margin for the quarter is expected to be in the range of 19% to 20%.

“During the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and pushouts of existing backlog from our European distributors,” said Zvi Lando, Chief Executive Officer of SolarEdge.

“In particular, installation rates for the third quarter were much slower at the end of the summer and in September where traditionally there is a rise in installation rates.”

As a result, third-quarter revenue, gross margin, and operating income will be below the low end of the prior guidance range, the company said. 

Third-quarter revenue is now expected to be in the range of $720 million to $730 million, compared to the previous expectation of $880 million to $920 million.

The sharp selloff in SEDG shares comes after Rep. Michael McCaul was aggressively selling shares over the summer. Most recently, Congressman McCaul reported two $50,000 - $100,000 transactions involving the sale of SEDG stock while it was trading just below $180.

Following Friday’s selloff, SEDG shares are exchanging hands below the $90 mark. The stock was already down 60% YTD based on Thursday’s close.