Has First Solar Gotten Ahead of Itself?

First Solar, Inc. (Nasdaq: FSLR) announced some interesting equity news last Friday. Not a surprise since the Company's share price has doubled since early May. The Company's CEO sold 250,000 shares as part of a prearranged trading plan and First Solar filed a registration statement with the Securities and Exchange Commission for a proposed offering of up to 9,650,000 shares of its common stock. The 9,650,000 shares to be registered include 5,650,000 shares owned by certain stockholders of the Company. The value of the offering alone approximates $1B and the majority of the cash goes to existing shareholders.

Coincidentally, the FSLR daily chart showed it's first real sign of weakness since going public in November last year. The MACD has turned harshly negative and the stock has closed below the 10 day moving average the last five days. A pullback near the 50 day moving average, currently at $83.53, is likely at some point. The last two pullbacks under the 10 day moving average approximated the 50 day.

In addition, FSLR has a market cap that approaches $8 billion with a current year projected P/E of 218, well above its peers. First Solar is a great company with a solid future ahead of it; the stock has just gotten way ahead of itself. The irrational excitement surrounding solar will shift to another clean tech "sector" soon. Fuel cells, microturbines, flywheels, wind turbines, hyrdrogen, butanol and others are calling. The $1B offering, the CEO selling shares and the technical breakdown should provide a great short opportunity right now.

FSLR 6-mo chart

Disclosure: none

Comments

[TLD2:]

Yea..GO FOR IT!!! FSLR is shorted by about 25% of it's float...So go ahead and short it to death. Disclosure: I own FSLR since the opening day, earnings are coming next Tuesday and I expect there to be quite an exciting "covering" by the shorts making my FSLR stock go through the roof!!! :)

TLD2

2007 Jul 26 12:08 AM