First Solar's Future: Bright or Dim? 88 comments
Stephen Frankola
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Solar stocks, along with shares of other alternative energy mediums, are currently being sold as "the next big thing" in the stock market. Whenever a stock or industry is touted as such an investment, be cautious.
One day, solar energy may make up a meaningful proportion of energy generation in this company, however, even with the advances that companies are making, it still makes no economic sense to choose solar over another power medium. Even in a very sunny area like Odessa, Texas, solar panels generate a very unattractive return on investment. According to BP's (BP) website, a 6kW fixture would generate enough power to cover the average home's yearly use (about 9,000 kWh) would cost $49,000.
There are cheaper panels available (from other companies, like First Solar Inc. (FSLR), SunPower Corp.(SPWR), and the others talked about daily by pundits like Jim Cramer), but it's clear that buying panels offers a terrible Return on Investment [ROI]. The 9,000 kWhs per year equates to an energy bill of about $1000-1500, or 2-3% of the original cost. (Sure, panels can be purchased under mortgages and then qualify for tax-deductions, but instead of looking at every loophole, I'm looking at the big picture.)
Now Texas is one of the many states (like my home state of Pennsylvania) that offers little subsidies or refunds for panel purchases. The same panels purchased in Los Gatos, CA would qualify for $9,747 of additional rebates, $12,825 in Beverly Hills, or $23,000 in Albany, NY. In a state like NY, which refunds (what appears to be) about half of the purchase price, the investment is more attractive; however, solar output is also lower, so the ROI may only improve to 4-5%, still rivaled by simple, safe investments like CDs or I-Bonds.
I'm not here to discuss exact costs, but my point is, people (or companies) cannot honestly be motivated by economics, at this point, to purchase solar power fixtures. Secondary motives, like saving polar bears and penguins or electricity security during system-wide blackouts or a requirement (as is the case for CA's energy producers) may influence the decision to buy panels.
I view those general factors as an issue that the entire industry has to face, but First Solar is looking particularly vulnerable.
FSLR is expected to report earnings today, profiting $.47 per share. Analysts predict about $2.53 this year and $5.11 next year - certainly, growth is foreseen. FSLR's future estimates manifest how inflated expectations already are. 2010's earnings estimate is $8.75/share, which would be a multiple of 32 - much higher than many current companies' TTM- or this-year P/Es. That conclusion is also reached by assuming the best-case scenario in many variables, like the price and availability of cadmium tellurium remaining ideal, and new production facilities coming online-as expected.
In a heavily subsidized industry, the end of such subsidies would also be disastrous. That doesn't seem too likely in the U.S., where all three (but especially two) of the prospective presidents are pushing green energy, but in more developed countries, like Germany, who have been subsidizing for years, it looks like there may be an end to help to the industry.
First Solar's panels are made differently than any other company; instead of using the now-more-expensive silicon, they use tellurium. That helps them now, as it lets them offer attractive pricing, but may hurt in the long run; solar-grade silicon is being produced in bigger quantities by more companies as the solar movement is spreading, which should eventually lead to cheaper prices for that raw material. First Solar's tellurium appears to have supply and pricing issues, as is discussed here.
Lastly, insiders have been dumping stock lately. About $100 million of FSLR stock was sold during the past few weeks, mainly by FSLR's CEO. Yes, the sales were under pre-made plans that allowed such sales, but the CEO was not obligated to sell anything. If he though the company was a steal at $285, like the general market seems to think, why would he be letting go of his shares two weeks before earnings? (Insider data is available here.)
My bottom-line conclusion is basically to short FSLR based on common sense. The current share price seems blinded (by the sun?) towards any sense of valuation, and towards potential difficulties. The end of subsidies, a tellurium disruption or price increase, or delay in facilities coming on-line. They may indeed beat estimates and raise guidance, as the solar business is hot right now - but I think rationality can't be ignored much longer. Years of good fortune are baked in to share prices already.
My risk tolerance is high, but I'm still worried by the $50 pop after the last earnings report. However, I'm short FSLR. It has fallen from $285 to $160 before, and I'm hoping that the same increase in rationality causes a similar crash after earnings are reported today.
Disclosure: The author is short FSLR, and a little scared that hype will take over after earnings.
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This article has 88 comments:
That's just funny. Commercial buildings can get panels put on here in Colorado for about 10% of the cost, after state and federal government incentives. Way to look at the "big picture". Good luck with your "common sense" short.
You keep mentioning that the earnings are to be out today April 29th, although the earnings are to be posted tomorrow the 30th instead. What else are you getting wrong?
But what's with the discussion on solar ROI? You do mention different conditions in different states, but otherwise I have to say you've got some pretty shoddy assumptions. Ever hear of net metering? Peak rates? Subsidies are part of the picture right now, sure, but aren't the only way a system pays you back. What about the life of the system, given that most panels have a 25 year warranty, and that panels made 40 + years ago are still working fine today? Are you assuming that power rates remain fixed? Do you see any value in solar as a hedge against power rate changes? What are the chances solar system owners would get carbon credits they could sell to coal companies under a cap-and-trade system, given that all three presidential candidates support some version of such a system?
Yes, solar might still be impractically expensive in Texas and much of the country, but there are other US markets (California) where it is prudent economic decision today, and still further markets where it will soon be one.
Also, you say "it still makes no economic sense to choose solar over another power medium". Answer me this, does it more make economic sense to keep investing in energy sources that are depleting and rapidly increasing in cost per BTU, or ones that are renewable and are rapidly decreasing in cost per BTU? If we don't invest in future technologies we will never have them. Recent history suggests it is likely that First Solar's panels will very soon be priced at or near parity in cost per energy unit with the electric grid. I think it is only common sense to continue to invest in that future.
I don't doubt that solar energy will play an important role in powering the world. I do, however, doubt the current merits of FSLR's valuation.
I regret using the BP statistics, because there are cheaper panels available. However, those statistics do (at least somewhat) represent costs closer to what consumers will pay. First Solar does not market panels to consumers - they are intended for large scale applications.
Steve, I realize that aggressive incentives have made solar practical in some parts of the country; I list the large rebates given in New York as an example.
I also appreciate attacks focusing on age.
The central thesis of the article was that the current market valuation of FSLR is too high. I admit that the growth prospects for FSLR and the industry are high, in light of expensive, declining oil supplies. But as I stated, when a stock is trading at about 50 times next year's earnings and 32 times 2010 earnings, its hard for the price to appreciate further based on rational expectations.
FSLR will probably open at $225 or $350 tomorrow. I don't know who will have the last laugh. Maybe I'll be proven wrong, and they'll raise estimates to $20/share for 2010. Maybe irrationality will drive the price up. But in the solar arena, there are better values to be had, and I would be cautious about going long at this point.
Solar is thus just the beginning of demand-side and behind-the-meter optimization strategies for utility operators.
Seeking Alpha needs to more closely monitor the quality of the articles posted on its site and avoid the proliferation of information like that expressed in this article, which largely comes from a position of ignorance about how energy is used or utilities operate.
Just a few comments. First, I completely disagree with Craze's comments that SA should censor poorly written and poorly researched articles. I think the brain trust that constitutes the readership at SA can do a much better job of critiquing articles than SA editors can do in censoring them.
Second, Mr. Frankola uses old numbers in making his case that solar is too expensive. Unfortunately, he is NOT alone, and many people much older than him and who should know much better than he use the same ridiculous $8 to $10/watt for solar.
Third, solar is TODAY cost-competitive with conventional power IF we value ALL costs (including environmental), but many people are not quite used to that, so if one does not take this approach, solar IS more expensive, especially if one's sun resource is poor or if one lives in a state with poor incentives.
Finally, although most of Mr. Frankola's initial discussion was wrong and irrelevant to his final thesis, I COMPLETELY agree with him regarding FSLR's ridiculous stock price for reasons I have expressed in greater detail in my article published 4-24-08 on SA (Further Musings . . .).
Briefly, in my personal view, no stock is worth 100 times 2008 earnings (and I'm assuming earnings of $3 this year, not the consensus view of around $2.50). Second, once poly gets down to $40-50--which I think is likely to occur within 18-24 months--much (if not all) of FSLR's price advantage will disappear. And without a striking pricing advantage (which it clearly has now), FSLR becomes just another solar stock.
Do we have any examples of wonderful companies, doing wonderful things, but which simply failed to meet the ridiculous expectations that were put on them?
Yeah. AAPL, GOOG, SPWR, and STP.
All former high fliers (though none as high as FSLR), all of which reported fine (or more than fine) at their last quarterly announcements, and all of which are substantially below their 12-month highs.
I sure hope FSLR does not disappoint tomorrow because I am holding a TON of TSL (plus options) and a fair bit of STP, but if it does, I won't be shocked. And if it doesn't, it will in the next 2 or 3 quarters.
Disclosure: I am far older than 18, and am not short FSLR.
Jack Yetiv
fslr has NOTHIGN to do with my roof top. it is big power plants that come in hundreds of megawatts. so.cal and canadian utilties alone are piloting close to 2 gw (the pilot is from 20 to 50mw) each on fslr.
the only company in solar sector to beat the dirty coal power price in 2009 is fslr.
so what if the ceo sells. if he is doing by plan then what's the problem. if the stock tanks to 150 also he has to sell as per pre arranged plan. so what's the big news about it.
tomorrow flsr will give 80 cents per share. expected is 47cents. expect announcements on new hundred megawatts orders from them.
and frank dont cover your short till it reaches 400 in next couple of weeks okay?
short interest daily volume days to cover
4/15/2008 3,367,817 5,723,195 1.000000
3/31/2008 2,837,420 4,130,981 1.000000
3/14/2008 2,739,593 5,422,561 1.000000
2/29/2008 2,990,775 5,125,587 1.000000
2/15/2008 3,297,304 7,836,434 1.000000
1/31/2008 2,797,210 8,571,926 1.000000
1/15/2008 2,864,144 5,152,465 1.000000
12/31/2007 3,211,976 3,349,538 1.000000
12/14/2007 6,694,072 4,803,766 1.393505
11/30/2007 7,211,171 4,880,855 1.477440
11/15/2007 6,243,647 5,070,728 1.231312
10/31/2007 5,991,271 3,019,707 1.984057
10/15/2007 5,991,492 2,660,295 2.252191
9/28/2007 5,619,191 3,195,216 1.758626
9/14/2007 3,562,261 2,496,180 1.427085
8/15/2007 2,701,487 2,959,008 1.000000
7/13/2007 3,355,712 2,783,997 1.205358
6/15/2007 4,563,173 1,779,744 2.563949
5/15/2007 3,548,055 2,125,631 1.669177
4/13/2007 2,302,800 1,670,706 1.378339
Andrew, there are multiple famous short sellers, such as en.wikipedia.org/wiki/... , and it's a hedge fund and mutual fund tactic. Don't be overwhelmed by "professionals" - why not utilize a tool that professionals do?
Today, finally we know why. PAL released an explosive breaking news on its latest drill result. The result is a discovery of the world's highest known grade PGM precious metal mineral body.
PAL literally have hit a big JACKPOT. Once the numbers are know, the price should shot up. I now know why some one bought 400 PAL calls of June $10 strike. He did not even bother with the $7.50 call.
Folks at FSLR, must you wait for the breaking news that FSLR is shutting down production line due to tellurium shortage, will you start to sell this bloated PIG? How many times I urge you guys to just call FSLR and demand a quantitative answer on their tellurium supply? You have been warned, repeatedly. Therefore when you go broke on FSLR's collapse, you have no one to compain but yourself.
seekingalpha.com/artic...
Andrew listen to me. Dump your stack in FSLR. Or go tell FSLR to send a lawyer to talk to me. Why are they avoiding me?
theres a saying, when all the good news cant get any better, when its all roses, thats when the stock will fall. this stock has not been able to gain ground since nearing $300, its stalled and hasnt wanted to drift lower, the news articles came out today after the price started to drop, tells me the authors are protecting large clients who are now filing out, only large sellers can cause a collapse or a rally, the price started to get away from them, so two articles arrive one arrived early, that didnt help enough, so Piper Jaffry comes out and raises their targets!
sure they did, they just need to exit or their clients did.
either way, the stock would have run up into ER, and it didnt, its been rolling over, value and PE were invented to sell shares to wall street, they in turn use metrics to sell shares to clients. bottom line is, when stock lose favor, no matter what the PE they can fall long and fast.
we have a weak economy, we have uncertanty, we have shares of FSLR, very very profitable shares, very lucrative shares, thats an assett of great value, whos going to leave that there in these uncertain times?
thats a ripe plumb waiting to be picked. but instead its going to fall to the ground!
watch, no matter what the earnings are or the forward guidance.
she tanks tomorrow!
shes too fat and too much money to much profits sitting there un taken!
profits, are not profits until you sell!
i say big gap down tomorrow!
analysits have agendas, they are apart of a community, they call in favors, two articles today to prop up share price? why? becuase they want out before the public?
i have seen so many times, a great growth story grear PE great everything, get hammered down, while every body is argueing about metrics, PE, VALUE ETC....the stock falls, and investors convince themselves there sacred valuations will make the stock magically rise back up and give them another 100%.
what they dont consider, is why people invest at all?
why do they? to make money! wall street makes billions every quarter, every quarter goldman sachs tradeing department makes billions, just whos money is that? its yours! when they win you lose! and they use every dirty trick in the book, as evidensed today when they wrote those articles to prop up price.
nobody makes money, until they sell the stock, tomorrow theres $280 reasons to sell, and not enough to buy!
On Apr 30 12:31 AM PEPPER wrote:
> I made a few spelling errors, i meant to say, large buyers cause
> rallys and large sellers cause drops. right now large sellers have
> been whittling away at FSLR shares and today, they almost succeeded.
>
>
> analysits have agendas, they are apart of a community, they call
> in favors, two articles today to prop up share price? why? becuase
> they want out before the public?
>
> i have seen so many times, a great growth story grear PE great everything,
> get hammered down, while every body is argueing about metrics, PE,
> VALUE ETC....the stock falls, and investors convince themselves there
> sacred valuations will make the stock magically rise back up and
> give them another 100%.
> what they dont consider, is why people invest at all?
> why do they? to make money! wall street makes billions every quarter,
> every quarter goldman sachs tradeing department makes billions, just
> whos money is that? its yours! when they win you lose! and they use
> every dirty trick in the book, as evidensed today when they wrote
> those articles to prop up price.
>
> nobody makes money, until they sell the stock, tomorrow theres $280
> reasons to sell, and not enough to buy!
We are seldom old enough to have experienced something that we would have otherwise learned from studying history. Traders who in their mid-life think they have seen all in the last 20 years of their career are particularly prone to this kind of age hubris. If he is young, the author is also articulate and intelligent. And I happen to agree with him long term: the chance of picking a winner in a rapidly changing technological landscape is next to nil--that is, if he can hold out for a few years, his short will pan out. But tomorrow, he'll get his teeth kicked in, I'm afraid.
--
The market can stay irrational longer than you can remain solvent.
Babak, I appreciate the kind reply, but actually, you sort of have my thoughts twisted. I think that solar will be a good long term play, but FSLR will not hold up at current valuations.
The first number was OK but didn't blow things away. Obviously, the conference call at 8 is what's going to matter now.
forex saved them this quarter.
they did raise guidance a tiny bit for the year, but is it really good enough? midrange was about 1b vs. 950mil before the call.
how can a long still be confident at this price?
seekingalpha.com/autho...
Don't neglect the articles from last year on capex and high energy prices they are still relevant today!
www.investorslive.com/.../
i agree on one thing. it is not the monster fslr beat. but remember fslr is not ma or rimm to be beating every qtr and guiding up monster. it is a business that involves lot of product nuances, cycles, pilots, etc.
they guided higher as usual and i think they are conservative since they are working on good number of pipeline projects which might take time to come onboard.
same with spwr. they increased year guidance big time but gave conservative next qtr due to product cycles.
i was waiting for 260 from weak hands to enter fslr but never happened.
Let me see here:
1) Cost per watt--FSLR's main advantage supposedly--essentiall... unchanged qoq (actually, up 2 cents), with cost per watt guided to INCREASE next quarter (while poly-based panels will DECREASE next quarter)
2) Throughput per line--3% increase qoq.
3) Gross margins--down from 55% to 53%, qoq, with guidance of a further decline next quarter.
4) No new major contract announcements.
5) Oh, yeah, I forgot the best part: Revenues at $196.9 million, DOWN from $200.8 million in the previous quarter.
6) Oh, even better--earnings DROPPED to 57 cents from 77 cents the previous quarter.
Further thoughts in future comment.
Jack
Can anyone cite another company that had negative growth in the present quarter, and minimal (if any) improvement expected in the next quarter, and that has been given 100X+ forward PE by the market?
Please realize that while FSLR will go three quarters in 2008 (first thru third) with NO improvements in cost per watt, the poly-based manufacturers will probably experience at least a 10% decrease in cost per watt during the same time frame due to increasing efficiencies and decreasing poly costs.
Jack Yetiv
store.solar-electric.c...
www.investorslive.com/.../
100X this year's income is a worthless measure for a hypergrowth company. When I bought the stock is hadn't made a penny. The next day it was trading at 500X income, and $40/share. The key is the growth rate. Although my growth expectations are now lowered, the analysts who are constantly behind the curve may actually raise estimates. That explains today price movement.
As for using quarter over quarter comparisons, maybe you couldn't decipher Jen's German accent but last quarter he clearly stated that the margins were an anomaly not to be expected in the future due to factors such as the exchange rate and ramp up expenses. Similarly, although the lack of efficiency gain was disappointing it would be far more disappointing to have two consecutive quarters without gains. As he said these gains are event driven and don't necessarily occur every quarter. You can't conclude that 10.6% is the limit based on the fact they made 0 gain this quarter.
Hypergrowth? Are ya kiddin' me?
I used "earnings and revenues" growth (what a misnomer) in my post to decide I wouldn't pay $100 for this stock.
As to when you bought the company, ASTI, ESLR, etc--that is completely IRRELEVANT. FSLR is a post-mature company that is being far overvalued for ridiculously LOW growth prospects.
Jen's German accent is very clear, and they clearly guided to LOWER margins next quarter, and this quarter was lower than last quarter. 3 quarters in a row--hardly an "anomaly."
There was not a SINGLE thing said at today's conference call that was exciting or that would just 30X multiples.
I have never shorted a stock in my life, but I gotta tell you, I have never been more tempted in my life.
Jack
Mike Ahearn stated that quarter what I had suspected for some time. At a 20% installed discount to the market FSLR sells it's product below what they potentially could in order to build a wide customer base and ensure future demand. In other words they aren't even trying to maximize profits at this point, only to reduce costs. If you want to assign PE it had better be for 2012 and beyond when their tax holiday is in effect and demand reaches equilibrium with supply. But have you have stated before estimating earnings that far into the future is not an exact science. The human brain is deficient in calculation skills but compensates with it's knack for intuition. This is why humans still stand a chance against chess computers.
Remember what happened to internet stocks in 2001?
BTW to date I have seen no research indicating that low PE stocks outperform high PE stocks. There's also no reason to think that low PE stocks are "safe investments." Financials and homebuilders in 2006 were all trading at half the PE of the general market. Even so far this year in a down market "value" mutual funds have performed identically to "growth" funds. Warren Buffet doesn't just pick stocks with low PE. The main reason for his success is his emphasis on "durable competitive advantage" something that FSLR has achieved to the extent possible at such an early phase.
bought the 220 puts while the stock was above $300 today at $.30. Could flip them now and double the money, but I'll hold and see what happens.
It's a simple request.
I do NOT agree that FSLR has "disruptive" technology. What FSLR has is a present cost advantage that is rapidly waning--especially given that FSLR's cost per watt has gone UP from Q4 to Q1, and is being guided UP again for Q2.
If they have a printing press for $100 bills, they must have run out of paper or ink this quarter because they printed way fewer $100 bills this quarter than last.
As to Andrew, he keeps arguing against what he was told when the stock was $40. I wasn't the one who argued with him. I am arguing NOW, based on today's information.
As to hypergrowth, c'mon, Investing 101 tells us that--the market is FORWARD-looking. If the market is paying 100X PE, it's because of FORWARD anticipated growth, not PAST growth.
What forward growth did FSLR guide to? Doubling of revenues in 2008? TSL and CSIQ are expected to more than double revenues, and far more than double earnings in 2008.
Also, I will bet both TSL and CSIQ will show much greater revenue and sales growth when they announce in the next couple of weeks than the NEGATIVE earnings and sales growth that FSLR showed between Q4 and Q1.
Anyone care to bet?
Jack
and you should bet by doing a short flsr/long other solar. less risk, potential great reward.
But for the long term todays or any single days events have little effect on the companies performance. For the long term you have to look at Y/Y growth instead of Q/Q and Y/Y is still nearly triple. The second derivative (growth in growth) seems to have peaked mid last year but that is to be expected. The relative second derivative is still quite strong compared to companies it's age and size. The first derivative (growth) is still strong. The 0 derivative (earnings) is backwards looking. The 3rd derivative is useless unless the market is focused on the 2nd derivative.
The point is the spread between the bid and ask is huge relative to the price of the contract. Imagine if you made a trade with a broker that charged $10000 a trade yet you still made a net $10000 off the trade. It would still be a bad trade because you should've made $19995.
a 714% y/o/y growth is no joke. tell me 1 company that can deliver this kind of performance?
i got the below from real money website.
First Solar (FSLR - commentary - Cramer's Take), the solar module manufacturer that is in expansion mode, reported earnings of 57 cents per share, for 714% year-over-year growth and a 26% decline sequentially. The sequential decline was due to an annual contractual pricing decline of 6.5%. Revenue increased year over year by 194%, to $197 million. More importantly, operating margins increased by a hefty 23%, to 30%, despite costs increasing by 151%, to an average of $1.14 per watt.
very importantly, they have american market foothold
The company, which has most of its revenue based in Europe, is setting its sights on the U.S. utility market -- particularly in the Southwest. One such project is a 7.5-megawatt project with Southern California Edison, which is under review by California regulators.
this i guess is a whopping 750mw capacity. and it is no joke this capacity and if fslr gets it, they have lined up canadian and oregon implementation on same > 500 mw capacity.
the juice is just starting from fslr. wait till more annoucements come after canada and so.cal pilots.
And Steve - You're right - I didn't get into the game until I was about thirteen, so 2002 is probably when I started investing.
"With clarity through 2009 "forward" really means 2010. I agree that 2010 looks worse today than yesterday since there were no new announcements."
What clarity? I have asked you several times to call earnings for this quarter, and you finally did--77 cents. The real number of 57 cents is 26% less than your call.
Care to tell me now what FSLR will make for all of 2008 and all of 2009, and how you modeled that? What happens to margins when the price of the inputs (glass, aluminum, interest cost, etc) goes up while ASP's go down 6.5%? For the poly-panel makers, although their ASP's will also go down, at least the price of their #1 input (poly) will also go down.
And, by the way, if FSLR's panels are so great, why are their ASP's this quarter $2.45 while the poly panel makers are selling their product for over $3.50/watt?
REASON: FSLR's panels aren't so great, take twice as much room (or more), cost much more to install (more wire, more racks and supports, more time, more labor), and therefore, they have to discount them substantially to sell their production.
Tell me again what they announced on today's conference call that you found exciting?
Jack
seekingalpha.com/artic...
With a return on assets of 15%, imagine you could buy a hundred dollar bill machine for $700. 1 bill a year. It would be a great deal. But what would the company that could make the machine be worth? If there were no other limitations, about $100 Trillion. The world energy market is worth a similar amount.
"Your bet on c-Si is misguided. c-Si fixed production costs cannot be reduced to a point that allows c-Si to compete with CdTe or the other emerging thin film technologies. I strongly suggest you look at the fixed production costs of c-Si to understand this issue and then re-evaluate your solar investments accordingly."
Source for above statements?
As to emerging technologies, I cannot speak because I have no real data as to real-world-commercial-... costs using those technologies--and neither do you.
As to poly-based panels, take a 200-watt panel that used about 10 grams of poly per watt in 2007--total poly used=2 kg. ASP is around $3.75, so manufacturer sells it for $750. But cost of poly (at $200/kg, spot has been as high as $400 or more) used is $400--about HALF the ASP of the panel, and more than half of the cost to produce it.
Take poly this year--contract prices are probably between $100 and $200/kg--and even at $100/kg, cost for 2 kilos would be $200--still a large part of the panel's total production cost.
But next year, many manufacturers will be approach 5 grams/watt (ESLR already claims to be there with its Quad-Ribbon technology), and many people believe poly will be well under $100/kg.
But even at $100/kg, but now needing only 1 to 1.5 kilos, we're talking $150.
Thus, a cost that was $400 last year might well become $150 next year--combining greater efficiencies and lower price of poly.
And at $150 poly cost (less than $1/watt), I believe poly-based panels will be price-competitive with FSLR's thin-film.
Jack
But what the heck, at 714% yoy, they need to do about $803M in Q4 2008 to keep it up.
I don't *think* anyone here is trashing the company, but the growth rate is going to taper off.
1. FSLR has stated they are not building 8 plants next year, and 32 the year after that. So 400% per year isn't going to happen.
2. Once poli based production comes within 2x cost of FSLR their advantage wanes significantly as the cost of twice (potentially 3x)as many panels per install becomes a major factor.
Seriously, your comments as well as Andrew Ling's are a reason to sell alone. The term 'bull' is not adequate to describe your collective position. The stock is already a '12 bagger', let it go. Find another stock to ride upwards.
If you think that's crazy talk, then I suggest you diversify and go long Potash. They seem to be early in the growth curve as well.
AMAT? Different discussion.
Yes FSLR can expand, but 700% isn't going to happen ever again. The laws of big numbers start to kick in. 714% is absurd going forward. Does anyone think they will do $4 per in Q1 2009?
At the end of the day my argument is that FSLR's sales growth curve is flattening out, and their stock price is based on continued near vertical growth. Something has to give. If you want to argue about other things I have no comment.
Numerous studies have found correlations beween long term growth rates and price performance. When I first bought FSLR I believe there were 0 analysts covering it. Only two resources I know of have a solid track record. Valueline and Investor's Business Daily. Valueline has no rating and IBD has consistently rated it an a+ and the #1 energy stock out of 85. The others are mostly oil companies. Solar stocks rarely crack the top 5.
As long as I watch closely, my short will be profitable. However, as stated in the original post, I do believe that this downtrend has farther to go.
news.com/News/Item/0,4...
No wonder you talk in circles and your arguments don't make sense. That's your goal! When something smells fishy, it usually is.
I actually put in an order for 100 May $250 puts at $2.50 yesterday when the stock was about $293 but it never traded. I did not want to be more aggressive because I knew that although downgrades should have been flying yesterday, they weren't and that raised a serious concern in my mind that some yahoo analyst would RECOMMEND the stock today--even though in my view (see comments above), FSLR isn't worth $100, much less $300. I was also concerned that the decay in the very high premium for such an out-of-the-money put would make the put value decrease rapidly.
Anyway, even the lukewarm downgrades (not a single one suggesting a SELL?) tanked this stock today, so the put that I wanted to buy at $2.50 (but traded while I was watching it as low as $2.75 but did not get to $2.50) closed today at $8.
Congrats again Mr. Frankola on a good trade.
But for the reasons I stated above (eg, some yahoo analyst saying that now at $260, there is some upside), I would sell now if I were you and take your 3-bagger (or more because you bought farther out o fthe money).
Of course, it would not shock me to see FSLR under $200 by the end of this year--or possibly much sooner, depending on how they announce next quarter.
Jack
Thank you very much.
I bought May 220 put at $.30 yesterday when the stock was trading around $300.
It closed at $1.71 today, trading as high as $1.90.
Certainly there is a ton of volitility priced in and little time left, so hopefully FSLR will keep pulling back tomorrow and I'll exit. I'm being greedy, and hopefully I won't get burnt.
It's a shame your trade didn't go through, Jack.
The analyst releases today weren't even that terrible - one cut from outperform to perform, one cut from "buy" to "accumulate" while RAISING the price target and I think another analyst may have even upgraded (hopefully his boss talked to him tonight). Maybe another of the "strong buy" guys will feel compelled to bail tomorrow.
And given rapidly approaching expiration and the relatively low likelihood that FSLR will go below $220 (there are too many people with dollars who have pumped the stock who have a vested interest in the stock NOT cratering 30% in two weeks), even a $10 bounce up tomorrow will probably drop you from 5-bagger to half that.
As to my trade, I like to buy options REALLY right. That means the trade I input often does not trade, but it increases my longterm return. If you play enough dollars and enough times, this approach I think gives you a better overall return.
Jack
remember many of these same analysts DID NOT tell you to buy fslr when it was like 150 to 175 after severe shorting couple of weeks back.
we will see how it plays out. thin film is still hot and only FSLR delivers that technology in big power plant spaces. i am still betting on so.cal and canadian pilots to bring in close to 2gw and the stock will have to react to that in a very big way assuming its gets shorted in between then.
Steve: whatever.
"FSLR has a printing press for $100 bills...."
Is that an exactly quotation? Where is the source you quote it from? I am seeing some serious trouble here. The statement must be either TRUE or FALSE, no third possibility. If it is true, the FSLR needs to be charged with counterfeiting legal tenders of the United States Government. If it is false, then some one must be charged with spreading false accusation of FSLR of doing something illegal. Some one has got to be at fault here.
1. The most nasty post-er is wrong about one critical sliver of technology.
2. Jack Yetiv is a freakin' genius.