First Solar's Momentum Is Seemingly Gone

Amazing turn of events for First Solar Thursday.

Goldman Sachs initiated coverage on First Solar (FSLR) with a ‘Buy’ rating and six month price target of $125. Goldman Sachs analyst, Michael Molnar, said he’s bullish on the solar sector for the next six months, as he expects increasing demand relative to supply and news on continued government support of solar energy efforts. However, he further went on to state that solar oversupply is possible in mid-to-late 2008 but believes in an oversupply situation, he prefers First Solar because of its manufacturing efficiencies and low production costs.

With Crude Oil hitting $80 today, this was a perfect day for First Solar to rocket and not look back. The stock was up pretty nicely in pre-market as you would expect on the upgrade. In the past an upgrade such as this (after all, it was Goldman Sachs) would have sent First Solar to the stratosphere. However, First Solar closed the day down almost 4%.

The stock closed Wednesday at $102.19, opened Thursday at $105.50, went as high as $108.51 but closed the day at $98.13.

Thursday’s price action was a total shock to me. I have been following this stock since late last year and got burned pretty bad shorting it. Since then, I have been able to recover most of my losses.

So is the stock finally loosing momentum? Was there some other factor involved that I am not aware of? Maybe we look back at this day as the start of a downtrend in First Solar? But then again this could be a total non-factor and doesn’t mean anything. Trust me, anything is possible when it comes to First Solar. Let’s see what tomorrow brings.

Either way, I have been adding additional Puts and will continue to do so in the near term.

By the way the comment by Goldman Sachs, solar oversupply is possible in mid-to-late 2008, can’t be good for the overall Solar sector.

Disclosure: I am short First Solar (FSLR)

Comments

[Robert Prit...:]

It may not appear to be good for the industry , but it will for the customers. When it costs the price of a house to install PV, it is high time that the materials dropped in price.

see www.findsolar.com

And the "3-Rivers Synergy Centre" is located at maccompanion.com/Renew...

2007 Sep 16 09:14 AM

[TexasRadio:]

Plenty of people got burned shorting internet companies. They had no idea just how big the bubble could get. However, in the end, the bubble burst and so did most of the companies. Remember when Sun Microsystems was $100 a share? They are still around, but considerably cheaper. There is no reason to expect anything different from the solar power bubble.

2007 Sep 16 04:48 PM

[GH:]

Check a few other GS upgrades of momentum stocks. Find the ones that went down after the upgrades. Then check the institutional ownership before and after those upgrades.

Connect the dots.

2007 Sep 17 02:09 PM

[Love to short:]

Please do not write any more articles on FSLR. Back in April, you recommended shorting the stock (at $60). Since then the stock has quadrupled. Then again in September, you stated that "FSLR's momentum is seemingly gone (stock was at 100). Since then the stock has more than doubled.

You clearly do not understand this story so: (1) stop shorting the stock yourself, and (2) stop writing artciles that recommend shorting FSLR. Short selling is for people who have a clear view of a company's flaws. . . a view you do not have.

2007 Nov 28 03:33 PM

[Andrew Ling:]

The funny is he wrote the article precisely when it was regaining it's momentum after it's only down month in history, August. For a long's point of view read my articles at

seekingalpha.com/artic...

and

seekingalpha.com/artic...

2007 Dec 04 12:54 AM