Wednesday was not the morning investors in solar stocks were expecting to have after a historic victory for Barack Obama.

Solar stocks, which have been rallying strongly for two days in anticipation of an Obama win, Wednesday morning have sharply reversed course, due in part to an ominous earnings warning related to the stronger dollar from SunPower (SPWRA).

Late Tuesday, SunPower said in a statement that the strengthening of the dollar against the Euro is expected to “reduce earnings growth” in both the current quarter and all of fiscal 2009.

SunPower said it has historically hedged its currency exposure. For tax planning reasons, the company said, it changed the functional currency of certain European subsidiaries from dollars to Euros, “resulting in greater exposure to changes in the value of the Euro.” This strategy, the company says, “had, and will continue to have, the ancillary effect of limiting SunPower’s ability to hedge certain Euro-denominated revenue.”

The result is that the company “became under-hedged.” SunPower says it now believes it has adjusted its hedging positions to limit its net income exposure to currency fluctuations and believes that it will be hedged for 80% to 90% of Euro-denominated net income in Q4 and more than 50% for the first three quarters of 2009.

SunPower nonetheless says foreign exchange factors will reduce Q4 revenue by $17 million, while reducing GAAP and non-GAAP profits by $15 million, or 15 cents a share. For 2009, the hit will be $50 million in revenue and 50 cents a share in non-GAAP profits.

The company said that excluding those factors, its guidance is unchanged; the company previously forecast Q4 revenue of $388 million to $418 million, and non-GAAP EPS of 58-65 cents. For 2009, the company projected $2 billion to $2.1 billion in revenue and non-GAAP profits of at least $3. Ergo, SPWRA is now predicting profits of 43-50 cents for the quarter, and at least $2.50 for the year.

SPWRA Wednesday morning was down $10.91, or 21.6%, to $39.59; the stock had jumped $11.44 over the last two trading days.

Among other solar stocks:

  • Canadian Solar (CSIQ) was down 90 cents, or 7.2%, to $11.60.
  • LDK Solar (LDK) was down $1.99, or 8.5%, to $21.50.
  • Energy Conversion Devices (ENER) was down $3.75, or 8.9%, to $38.39.
  • First Solar (FSLR) was down $13.32, or 7.5%, to $164.20.
  • Evergreen Solar (ESLR) was down 43 cents, or 8.1%, to $4.86.
  • MEMC (WFR) was down $1.69, or 7.6%, to $20.64.
  • Suntech (STP) was down $2.17, or 10.7%, to $18.06.