MEMORANDUM OPINION & ORDER I. INTRODUCTION SolarEdge Technologies, Inc. (“SolarEdge”) sells components for solar panel systems primarily to large distributors, equipment wholesalers, and installers in North America and Europe. In the third quarter of 2023, SolarEdge’s revenues declined, leading to a drop in the company’s stock price. Plaintiffs allege that the revenue decline was due in part to declining demand for SolarEdge’s products in Europe and an inventory glut caused by the company’s practice of forcing distributors to take delivery of unneeded products at the end of quarters to boost revenue numbers. Plaintiffs claim that SolarEdge and its executives made materially false or misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, Plaintiffs allege that Defendants failed to disclose the company’s practice of forcing product on distributors, that Defendants misled investors about inventory levels, that Defendants misled investors about demand for SolarEdge’s products in Europe, and that Defendants misled investors about sell-through rates. Defendants move to dismiss all claims pursuant to Fed. R. Civ. P. 12(b)(6), arguing that Plaintiffs fail to allege both that Defendants’ statements were false or misleading and that Defendants had the requisite scienter. Defendants’ motion to dismiss is GRANTED IN PART and DENIED IN PART. Plaintiffs have adequately pleaded that Defendants knowingly misrepresented inventory levels at SolarEdge’s distributors. But Plaintiffs have failed to adequately plead that Defendants knew about the alleged practice of forcing unneeded product on customers or that Defendants’ statements about demand and sell-through rates were false or misleading. Those claims are therefore dismissed with leave to amend. II. BACKGROUND A. Facts1 1. Parties Plaintiffs purchased SolarEdge securities between February 13, 2023 and October 19, 2023 (the “Class Period”). Dkt. No. 55, Consolidated Amended Complaint (“CAC”), 26. Defendant SolarEdge is a Delaware corporation with principal executive offices located in Israel. Id. 27. SolarEdge “designs, develops, manufactures, and sells” components for solar panel systems. Id. 43. SolarEdge common stock trades on the NASDAQ. Id. 27. Defendant Zvi Lando was SolarEdge’s Chief Executive Officer at all relevant times; Defendant Ronen Faier was SolarEdge’s Chief Financial Officer at all relevant times; Defendant Lior Danziger was SolarEdge’s Director of Investor Relations and Finance Operations “from prior to the Class Period to at least June 2021″;2 and Defendant J.B. Lowe was SolarEdge’s Head of Investor Relations at all relevant times (collectively, the “Individual Defendants”). Id.
28-31. Peter Mathews was SolarEdge’s North America General Manager, and he reported to Lando. Id. 34. Shimon Kringel was SolarEdge’s Vice President of Operations, North America and reported to Mathews. Id. 34. Amir Cohen was SolarEdge’s Vice President North America Sales / General Manager — Solar Business Unit, and he reported to Mathews. Id. 36. Nick Alex was SolarEdge’s Vice President of Sales and reported to Cohen. Id. 40. Alon Barel was SolarEdge’s Vice President — Global Sales. Id. 37. Alfred Karlstetter was SolarEdge’s Europe General Manager and “oversaw SolarEdge’s European business.” Id.
