FSLR is going down below $200 due to the following facts:
1. Oil is up but solar PV can’t replace oil. Solar PV is helpful for energy generation but still supplies less than 1% of global energy and it would not become the main energy source is next twenty years or longer.
2. Thin film solar panels made by FSLR are less efficient than silicon-based solar panels, which are being volume produced by worldwide competitors like STP, etc.
3. The rising competitors like Signet Solar, Masdar PV, etc, will eventually reduce FSLR profit margins.
a). Applied Materials recently completed a thin-film polysilicon manufacturing facility for Signet Solar Inc. near Dresden, Germany, in three months.
b). In the world’s single-largest investment in solar technology, the oil-rich emirate of Abu Dhabi announced Wednesday it will spend $2 billion to jumpstart a home-grown photovoltaics industry. The cash will fund what is undoubtedly the planet’s best-financed startup, Masdar PV, which will build manufacturing facilities in Germany and Abu Dhabi to produce thin-film solar modules that can be used in rooftop solar systems or solar power plants.
4. FSLR’ P/E is still around 100, which is weigh higher than its competition with better efficiency silicon technology, in the range of 20~40.
5. FSLR earning stopped growing after Q4 of 2007. 2008 Q1 results is worse than 2007 Q4 and the prediction for 2008 Q2 is more or less the same as Q1...No more growth
6. FSLR is is attempting to become the first photovoltaic company to become "utility-scale," that is, offer electricity to utilities at less than the amount they bill their customers for electricity. A typical California utility may bill its customers 12 cents per kilowatt hour of electricity. Until First Solar's modules can generate electricity for less than 12 cents per kilowatt hour, it has to depend on government subsidies to turn a profit on module sales.
7. Recently, Germany's federal lawmakers have expressed concern that the tariff will cost taxpayers upward of $189 billion by 2035. Thus, among other changes, they propose that the existing 15 percent reduction in the tariff scheduled for 2010 be enlarged to 25 percent, Calyon Securities (USA) analyst George Kotzias said in a client note. The companies with the most exposure to Germany and therefore the most at risk are, in diminishing order, First Solar, Energy Conversion and SunPower, Kotzias said.
8. Insiders of any true outstanding company will HOLD their shares for long-term gains.
Insiders of any crap company will try to dump their shares since they have no confidence in it at all and know the price would not hold up... That is what is happening with FSLR when the insiders dumping shares like crazy...
Too much hypes for FSLR resulted in sky high current price... The only right thing to do now is to take your profits before it disappear...
Solar Stocks: Too Many Players, Too Little Profit (ESLR, SPWR)
July 14, 2008 | By James Brumley
I love the idea of cheap, clean, and perpetual solar energy. As far as investment opportunities go, though, there may be too many names chasing too few dollars, and that's assuming solar power can be priced comparably to other forms of electricity production.
First Solar (FSLR): Expect Strong Q2 But US Market Will Disappoint--So SELL (FSLR)
Corey Lorinsky | Jul 7, 08 8:10 AM
FBR expects a great Q2 from First Solar (FSLR) (reporting July 30th), but they are worried about FSLR's ability to cash in on the US market over the next couple years:
We expect FSLR to have another strong report, beating estimates/consensus and providing strong guidance, driven by solid execution in ramping manufacturing capacities, as well as strong demand in Europe. Going forward, we also expect the company to take some market share from the si-based [silicon] competitors in Europe, given its more attractive ASPs/economics. However, for the US$10-plus of earnings that the bulls argue to materialize in the CY10 time frame, the U.S. utility market has to take off, and that is where we have a difference of opinion.
FBR believes the uncertainty of these three factors will force FSLR to tone down its US expectations:
· the timing of the passage of ITC [Investment Tax Credit]
· the U.S. government may or may not consider giving the investment tax credit directly to the utility companies [as opposed to home owners and businesses], which could change the size of the opportunity.
· the U.S. government may or may not consider adopting a European style FIT [Feed-in Tariff, a system in which electricity utilities are obligated to buy renewable electricity at above market rates set by the government] in place of ITC
The firms sees "a short-lived relief rally here in anticipation of strong report/guidance" but encourages profit-taking given "the significant downside risk" to the current CY09/CY10 earning expectations.
FBR maintains UNDERPERFORM on First Solar (FSLR), target price $200.
Additional recent bad developments for FSLR:
Citing Need for Assessments, U.S. Freezes Solar Energy Projects for nearly two years...
GE's PrimeStar Reveals Secret Strategy to Kill FSLR...