Shares of First Solar Inc. (NASDAQ: FSLR) are down more than 8% in early trading today following a downgrade from Avian to Negative and a report that one of the components in the company’s solar panels is displaying reliability problems. The worst part of the news is that the problem with the panels’ junction boxes carry a 20-year warranty.
First Solar’s stock price declined so quickly that it triggered Nasdaq’s short-sale circuit breaker.
Other solar makers, particularly those based in China, are getting beaten up as well today, following a story in The New York Times detailing the difficulties facing the Chinese makers due to rapid manufacturing capacity increases. Prices for finished goods have tumbled by 75% in the past couple of years, to the point where negative gross margins are the rule among Chinese makers. One Chinese industry executive told the Times:
The problem lies in the eagerness of Chinese businesses to rush into any new industry that looks attractive and swamp it with investments. Chinese companies and their bankers are then far more reluctant than Western companies to admit defeat for investments that prove unprofitable.
Part of the problem for First Solar is that its thin-film technology was for a long time significantly cheaper than the silicon-based technologies used at competing firms. Now that the competition is selling for the same price (and willing to take the losses), First Solar’s cost advantage has evaporated.
Shares of First Solar are down 8.8% at $20.55 in a 52-week range of $11.43 to $67.72.
Chinese makers Suntech Power Holdings Co. Ltd. (NYSE: STP), LDK Solar Co. Ltd. (NYSE: LDK) and Trina Solar Ltd. (NYSE: TSL) are also being hammered today. Suntech shares are down 4.1% at $0.90 in a 52-week range of $0.71 to $4.40. LDK’s shares are down 3.6% at $1.05 in a 52-week range of $0.99 to $6.92 and Trina’s shares are down 2.9% at $4.66 in a 52-week range of $3.95 to $12.19.
Paul Ausick
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
