Shares of Energy Recovery Inc., the desalination equipment manufacturer, plunged more than 32% on Thursday after management set 2026 targets that fell short of market forecasts and said it would exit its carbon dioxide retail grocery business.
The company gave a full-year 2026 revenue range of $115 million to $140 million, below the average analyst projection of $165 million. Adjusted earnings per share guidance for the year was set between $0.50 and $0.70, versus the consensus estimate of $0.88.
Energy Recovery also reported fourth-quarter results that missed Wall Street expectations. Adjusted diluted earnings per share were $0.53, short of the $0.67 estimate. Quarterly revenue totaled $66.9 million, underperforming the forecast of $82.6 million.
In a separate development, the company said it will wind down its carbon dioxide retail grocery business effective immediately. In a letter to shareholders posted on its website, Energy Recovery noted that achieving scaled adoption of that business would require substantial time, investment, and risk. The decision to discontinue the venture was announced alongside the updated 2026 guidance.
Market reaction was swift. Shares dropped as much as 34% during the session, marking the largest intraday decline on record for the stock. The initial downward move exceeded 32% before reaching the intraday low.
The combination of a forecast that missed analyst expectations and the immediate wind-down of a consumer-facing business weighed on investor sentiment, producing the sharp sell-off. The weaker-than-expected quarterly results added to pressure on the share price.
Context and next steps
Energy Recovery’s guidance and operational decision highlight near-term uncertainty for the company’s revenue and earnings trajectory. The firm’s stated rationale for ending the carbon dioxide retail grocery effort emphasized the time horizon, capital requirements, and risks associated with scaling that particular business line.
Investors and market observers will likely watch for further commentary from management on how the company plans to allocate resources going forward and whether there will be updates to capital allocation or cost structure that respond to the softer outlook.