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  • floppy_6 floppy_6 Jan 1, 2006 5:24 PM Flag

    Interesting Article on the Solar Market

    correct me if I am wrong.

    Their agreement with customers (or some) are fixed-price, but not on the suppliers side.

    I came to this board (2 wks) with the impression that SPWR sells roughly same value as the peers. Now I believe that entire U. S. are too optimistic about Solar. Look at Germany Q-Cell (I post earlier). The whole thing on Cy/SPWR story. The fault is on SPWR, some keep on blaming on core CY. It is not the right story.

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    • ...You got that right. The "solar" mainia comes along every time we see a spike in energy prices. Happened before during the last gas crisis. Solar is paraded out as the new energy savior of the 21st century. Problem is it never happens. My natural gas bill last month for a 3800 sq ft home was $89.
      BFD. Electric runs about $225. No way am I going to run out and start plastering ugly solar panels all over my roof to save a relatively small amount of money. Now industry is the big user of energy but why have they not converted? Too many other sources of cheap energy will be coming into this state in the future...Geo thermal produced energy from Nevada and Northern California...Oregon and Washington. Tons of potential there...Nevada is one major geo thermal site. Seriously. Look at the geology and it will blow you away..literally!

      The bubble will burst on the solar mainia and when it happens the solar stocks will go down like a rock. In the interim who the heck knows...People love to chase stocks going up and shorts are being sqeezed so more up possibly before down?

      • 1 Reply to fghton
      • Let me clarify the meaning of my last post - "The fault is on SPWR".

        Everyone, including institution, noticed the discrepant values between CY and SPWR. What institution can do about it? If we are over 270 lock-up period, they definitely hit the "sell short" on SPWR to lock in the current over-valuation. But we aren't on that day, any price before that day is phantom, meaningless to institution. Assuming they hold 1 millions shares of CY, they need to sell short 363,300 shares of a thin-traded stock SPWR. Theoretically doable but impossible to practice. All veterans know that to short a stock will incur the risk to be recalled involuntarily at any price, any time. When you deal with this thin flow, the risk is much higher. When someone short in huge amount, the clearance house may knock your door everyday.

        So no institution can play arbitrage here unless he finds a substitute to short. The only job he can do is a good estimate at reasonable value of SPWR after 270 days. I assume that they set SPWR at half of the current price, then everything adds together is roughly about the current CY price. Some analyst may step in and pound the table along the way. CY might have $3 upward movement. But as soon as the intrinsic SPWR reaches beyond some institution believes that couldn't exist after 270 days. They will hit the sale order.

        On the other hand, fantasy is still fantasy. Unless SPWR drops dramatically before 270 days, CY wouldn't drop to your dream price except general market meltdown.

        This is how I interpret efficient market. BTW, efficient market only exists in the MBA texbook. In the real world, it is no more than fear, greed and all kind of emotion. For the distrust emotion you had on CY, you ignore their good job on CCD division and good investment on SPWR.

        At last, I do believe that SPWR will have good growth and earning 2006. The question is on valuation.

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