Ahead of the trading opening: The Israeli company that crashed 30% yesterday
El Al doubled its profits and surged yesterday, but energy dragged Tel Aviv down. On Wall Street, the Dow hit a record, but AMD disappointed, and SpaceX plunged 13%. The major Israeli company crashed due to a weak forecast. What is expected today?
The trading day opens under the sign of the continuing busy earnings season, with Nova's turn today — and in the shadow of a sharp crash of one of the prominent Israeli stocks on Wall Street.
The story worth dwelling on is SolarEdge, the Israeli-American solar company, which crashed about 30% after publishing a forecast much weaker than expected. The company, which has already gone through particularly turbulent years, disappointed the market not in the results of the quarter itself but in the forward-looking forecast — exactly the parameter the market is most sensitive to in this period.
What happened there? The company is dealing with a combination of headwinds: weaker demand in the residential solar market (mainly in Europe), competitive pressure, and regulatory changes in incentives for solar energy in the USA.
The sharp fall illustrates how much a disappointing forecast can wipe out a third of a company's value in one day — and how much the market no longer forgives disappointments in a period of high valuations. For those who remember, SolarEdge was once one of the hottest energy stocks and traded at a peak with a value of around 20 billion dollars, compared to a value of about a tenth of that today.
The stock exchange provided a mixed day yesterday with a negative finish. TA-35 and TA-125 rose more than 1% at the opening but closed with a decline of 0.7%, as energy and infrastructure stocks weighed down — the Cleantech index was cut by 3.2%, infrastructure and energy lost 3.5%, and oil and gas fell 2%. Banks also retreated 1.6% in profit-taking after the rally.
The big star was El Al, which surged 15% after doubling its profits in the second quarter. Despite the damage from Operation Iron Swords and the closure of Ben Gurion Airport for part of the period, the huge demand for summer flights — along with reduced competition from foreign companies that reduced flights to Israel — boosted profitability.
On the other hand, Nice fell 5.8% after presenting a erosion in quarterly profitability, which fueled the fear that AI is eating into its service center business.
In New York, the picture was mixed after the strong rally. The Dow climbed 0.5% to a new record (above 54 thousand) thanks to Nvidia, which surged over 3%, but the S&P 500 and Nasdaq broke a streak of four days of gains and fell slightly.
Two reports disappointed investors even though they were good. SpaceX plunged 13% — despite beating expectations, the huge expenses on AI overshadowed it, and a lock-up release hangs over the stock today that will release 20% of the shares for trading.
And AMD fell about 7% despite reporting good results and a strong forecast — analysts, it turned out, wanted "extraordinary results," not just "excellent" ones.
Oil remained stable after Donald Trump hinted that an agreement to open the Strait of Hormuz could happen "tomorrow or the day after." Qatar reported that a framework had been formed between the USA and Iran, and Iran is even considering allowing European countries to clear mines from the strait — signs that maritime traffic may normalize.
The main local report today is from Nova, a manufacturer of measurement systems for the chip industry. After a difficult July for the sector (the stock fell 22%), the report will be examined mainly on the forecast: whether the demand for its measurement systems — which is derived directly from chip giants' investments like TSMC — remains strong.
The opening today depends on the direction of chips and the response to Nova's reports, while in the background the record on Wall Street supports, but the disappointment from AMD and SpaceX reminds that the bar is high. For the Israeli saver, these days are a carnival of reports — and El Al is an excellent example that a report can boost a stock 15% in a day, while SolarEdge loses a third of its value.
The difference, again, lies in the forward-looking forecast, not the past. Whoever holds these stocks through pension savings feels these fluctuations in the portfolio, even if they don't always notice. It is worth following the reports, but remember that a single day, green or red, is just one frame in a long movie.
