What happened

TPI Composites (TPIC) provided investors with an early look at its second-quarter 2023 financial results on Wednesday, and investors are not happy with the dour look at the company's performance. It isn't only the look back that's energizing the sell-off though; TPI Composites also reduced its 2023 guidance, and pessimism from Wall Street is pressuring the stock even further.

As of the end of Thursday's trading session, shares of TPI Composites had fallen 32.9% since the close of trading last Friday.

So what

Poised to come up short of analysts' estimate that it'd book $406.1 million on the top line, TPI Composites announced that it expects to report Q2 2023 revenue of $380 million. Investors are preparing for additional disappointment farther down the income statement. TPI Composites is guiding for Q2 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $36 million to negative $41 million. The company reported adjusted EBITDA of $10.3 million in Q2 2022.

While many companies see a strong end to 2023, TPI Composites is in the other camp. The company had initially forecast 2023 revenue of $1.6 billion to $1.7 billion, but it now expects sales to be lower this year: $1.53 billion to $1.58 billion. Similarly, the company expects adjusted EBITDA to be lower than originally predicted. Whereas management had previously forecast a positive adjusted EBITDA margin less than 1%, it now believes it will have an adjusted EBITDA loss of less than 1%.

Based on the company's announcement, analysts took a more pessimistic turn toward the wind stock.

  • Craig-Hallum downgraded the stock to hold from buy, cutting the price target to $11 from $15.
  • Piper Sandler slashed the price target to $9 from $12, keeping a hold rating.
  • Roth MKM downgraded the stock to neutral from buy and dropped the price target to $10 from $15.

Now what

Although management seems optimistic that conditions will improve in the second half of 2023, investors will want to see actual improvements in the company's financials. At this point, investors may be better off watching this story play out from the sidelines.