Enphase Energy (ENPH) told investors it could control its destiny. New products. Tight inventory discipline. Management told investors it expected demand to remain stable even as the residential solar tax-credit framework changed. Those statements conveyed confidence in Enphase’s channel management and outlook. Then on October 28, 2025, plaintiffs allege the truth landed. Shipments were being cut to clear excess inventory. The stock fell about 15% in a single day.
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Investors who purchased Enphase Energy stock between April and October 2025 are watching a newly filed federal lawsuit that alleges the company misled shareholders about its ability to manage channel inventory and navigate a major shift in residential solar tax credits.
A complaint filed in the Northern District of California on February 17, 2026 alleges that Enphase Energy, and two of its top executives made materially false and misleading statements during the period from April 22, 2025 through October 28, 2025. When the alleged truth emerged on October 28, 2025, Enphase’s stock fell $5.56 per share, or approximately 15.15%, closing at $31.14 on October 29, 2025. The complaint ties that decline to disclosures made during Enphase’s third quarter earnings release and related conference call. If you purchased Enphase Energy shares during the April 22 to October 28, 2025 period and suffered losses, you may wish to explore your legal options.
Enphase Energy: Solar Technology Company With Exposure to Policy Shifts
Enphase Energy is a global energy technology company founded in March 2006, focused on solutions for solar generation, battery storage, and energy communication systems. The company sells its products through a network of installers and also partners with third-party ownership companies, known as TPOs, that offer homeowners lease and power purchase agreement financing arrangements for solar and battery systems.
A key element of the residential solar market during the class period was the Residential Clean Energy Credit under Internal Revenue Code Section 25D, which allowed homeowners to deduct 30% of costs for qualifying clean energy installations. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law, which accelerated the termination of the 25D Credit from December 31, 2032 to December 31, 2025, which the company suggested could encourage customers to accelerate installations before the credit’s revised expiration date.
Alleged Misrepresentations About Inventory Control and Tax Credit Navigation
The lawsuit centers on two core issues: Enphase’s alleged overstating of its ability to manage channel inventory levels, and its alleged overstating of its ability to limit the financial impact of the accelerated 25D Credit expiration. The complaint alleges that Defendants made repeated public assurances on both fronts that were inconsistent with what ultimately materialized at the end of the class period.
According to the complaint, these alleged misstatements and omissions caused investors to hold an inflated view of Enphase’s financial and operational outlook during the class period, leading to losses when the company’s Q3 earnings release revealed weaker-than-expected conditions.
Stay informed on this case as it develops and learn more about investor rights in connection with this lawsuit.
What Enphase Executives Said During the Class Period
During the Q1 2025 earnings call on April 22, 2025, CEO Badrinarayanan Kothandaraman addressed channel inventory concerns, stating that any elevated inventory was a “normal cycle” and that the company was “disciplined to control the amount of material in the channel.” He characterized the company’s approach as one focused on recovering channel levels through natural seasonal sell-through rather than active undershipment.
On the Q2 2025 earnings call on July 22, 2025, Kothandaraman continued to project confidence, stating that the company was “in very good shape in channel management” and that it was “completely transparent” about inventory levels. Regarding the 25D Credit expiration, he stated that the company expected increased demand from homeowners rushing to capture the credit in the fourth quarter of 2025, and described active engagement with approximately 80% of TPO partners on safe harbor arrangements. CFO Mandy Yang provided Q3 2025 revenue guidance of $330 million to $370 million, including expected IQ Battery shipments of 190 to 210 megawatt hours.
The October 2025 Disclosures That Moved the Stock
On October 28, 2025, Enphase released its Q3 2025 financial results and filed a Form 10-Q with the SEC. The company reported Q3 revenue of $410.4 million, but noted that $70.9 million of that figure consisted of safe harbor revenue pulled forward from Q4, meaning that without that contribution, revenue would have been approximately $339.5 million, falling below the lower end of its own guidance range.
Management also announced Q4 2025 revenue guidance of $310 million to $350 million, significantly below analyst consensus estimates that had ranged between approximately $374 million and $383 million. Kothandaraman also disclosed that Enphase planned to reduce product shipments into the channel to address elevated inventory as the company moved into 2026, and stated that the company anticipated a larger-than-normal seasonal revenue decline in Q1 2026 due to the 25D Credit expiration, with preliminary Q1 2026 revenue expected around $250 million. Following this disclosure, Enphase’s stock fell 15.15%, closing at $31.14 on October 29, 2025.
Why This Matters to Shareholders Who Traded During the Class Period
The complaint alleges that investors who purchased Enphase shares during the April 22 to October 28, 2025 class period did so at prices that were artificially inflated by misleading public statements. According to the complaint, the market did not learn the full extent of Enphase’s channel inventory challenges or the anticipated revenue impact from the 25D Credit expiration until the October 28 disclosures, at which point the stock dropped sharply.
Shareholders who bought during the class period and held through that decline may have suffered losses attributable to the alleged fraud. The complaint further notes that multiple sell-side analysts, including Evercore ISI, BMO Capital Markets, and Goldman Sachs, reduced their price targets on Enphase stock following the October 28 announcements, citing the disappointing Q4 guidance and the Q1 2026 revenue outlook.
Federal Securities Laws at the Center of the Case
The complaint asserts two counts under federal securities law. The first count, brought against all defendants, alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit materially false or misleading statements in connection with the purchase or sale of securities. The second count, brought against the individual defendants Kothandaraman and Yang, alleges violations of Section 20(a), which extends liability to those who exercise control over a company found to have committed primary securities violations.
The plaintiff alleges that defendants knew or recklessly disregarded that their statements about inventory management and the impact of the 25D Credit expiration were misleading when made, given their claimed close contact with TPO partners and visibility into channel conditions.
If you purchased Enphase Energy shares during the class period and want to understand your legal rights, you are encouraged to consult qualified legal counsel.
About Levi & Korsinsky, LLP
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