June 17, 2020

Enphase Energy | ENPH – Update 2

Extensive research reveals smoking gun evidence of massive fraud by ENPH; we believe at least $205m of revenue has been fabricated. We are short the stock and expect a delisting.

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Following our initial research questioning the reported finances of Enphase in 2018, the company’s management has continued to make wild exaggerations about the health of its business and report too good to be true financials. Through a recently completed  investigation of the company’s operations in India, we conclude Enphase’s regulatory filings cannot be trusted and authorities should investigate. This will ultimately lead to an exchange delisting.

After an extensive on-the-ground private investigation of ENPH’s India-based operations, and a deep forensic analysis of the company’s accounting and business practices, Prescience Point concludes:

  • Prescience Point believes that Enphase Energy’s financial performance has been artificially inflated and its public statements filed with the SEC are wholly unreliable.
  • Based on the findings of our thorough, on-the-ground investigation of ENPH’s India operations, which included interviews of numerous former employees and industry participants, and our detailed analysis of the company’s accounting and business practices, we believe that at least 39%, or $205.3 million, of ENPH’s reported U.S. revenue is fabricated.
  • Within days of the completion of our private investigation in India, ENPH executives and board members suspiciously sold $120.9 million worth of ENPH shares in the span of just fifteen days from June 1st to June 15th, and ENPH’s previous largest shareholder sold its entire ~11% stake in just one day on May 20th.
  • We urge the SEC, The Nasdaq Stock Market, Deloitte, Enphase’s Board of Directors, and other authorities to immediately open an investigation of ENPH’s accounting and disclosure practices.
  • According to multiple former employees, a large portion of ENPH’s astronomical growth over the past two years is attributable to accounting gimmicks that artificially inflate revenue and profits.
  • Former employees in India have told our investigators that they believe that ENPH is utilizing an offshore finance and accounting team to help executives perpetrate potential accounting violations.
  • The massive decrease in ENPH’s costs of revenue per watt from Q3 2018 to Q3 2019 of 23.6%, or 37.6% on a tariff-adjusted basis, defy logic and puzzlingly occurred during the same time period that the company’s products were subjected to tariffs of 25%.
  • We have received data from large distributors of ENPH products in the U.S., accounting for roughly 69.5% of the distributor market, who reported growth in ENPH product sales that are far below what ENPH has reported.
  • Prescience Point believes the evidence presented in this report could lead to multiple government investigations, a major accounting restatement, shareholder lawsuits and a delisting of ENPH shares from the Nasdaq.

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