Canadian Solar Shares Plunge on Weak Q3 Guidance
Company forecasts a sharp drop in revenue and margins, overshadowing mixed second-quarter results and sending shares down nearly 20%.
Shares of Canadian Solar Inc. (CSIQ) plummeted nearly 20% after the company issued a weak forecast for the third quarter, signaling significant challenges ahead that overshadowed its mixed second-quarter financial results.
The solar technology and renewable energy company projected third-quarter revenue to fall between $1.3 billion and $1.5 billion, a steep decline from the $1.7 billion reported in the second quarter. More alarmingly for investors, Canadian Solar expects its gross margin to compress dramatically, forecasting a range of 14% to 16%, roughly half of the 29.8% margin it achieved in the period ending June 30.
The grim outlook soured investor sentiment despite a second quarter that saw the company report a GAAP net income of $7 million. However, on an adjusted basis, the company posted a net loss of $23 million, or $0.53 per share. While the quarterly revenue of $1.7 billion was up 42% sequentially, the company noted it fell below guidance due to delays in energy storage shipments and certain project sales being pushed into the second half of the year.
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, acknowledged the difficult road ahead. "We expect third quarter margins to moderate as difficult market conditions persist," he stated, pointing to normalizing demand in China and the impact of more recent, lower-priced orders for its energy storage solutions. "The second half will remain challenging, with rising solar supply chain prices and ongoing trade uncertainties," Dr. Qu added, confirming that the company's full-year revenue expectations have been adjusted to reflect project sales shifting into 2026.
Despite the headwinds, the company's manufacturing division, CSI Solar, shipped 7.9 GW of modules, which was near the high end of its guidance. However, the market's focus remained squarely on the future, with the sharp drop in projected profitability driving the significant sell-off in the company's stock.