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Wait For Regulatory Recentering On First Solar

Apr. 06, 2021 8:39 AM ETFirst Solar, Inc. (FSLR)NEE23 Comments


  • This $8.8 billion market cap photovoltaic manufacturing company may interest investors once the changes in the US and California energy investment policy are better known. The company does not pay a dividend.
  • Uncertainty about the latest spending bill, tax credit extensions, the federal goal of cutting solar costs, and the potential California scale-back of rooftop solar have dampened enthusiasm for the sector.
  • Investors may want to see how these regulatory uncertainties resolve, along with changes in First Solar's results after the divestment of two operating segments.
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Blue solar panels
Photo by VioNettaStock/E+ via Getty Images

Just as Covid was heating up over a year ago, First Solar (NASDAQ:FSLR) looked promising as a rare US-based photovoltaic manufacturer. While it made a profit in 2020 and is well-positioned to benefit

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This article was written by

Laura Starks profile picture

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Comments (23)

Laura Starks profile picture
Excellent WSJ front-page article today on why FSLR remains such a draw for US investors and Biden admin support (and green deal overpricing risk) and why I singled it out as the only solar company to follow a few years ago--only US company competing with state-sponsored Chinese cos. Key from energy security standpoint. Though not a meme stock, as with all white-hot bubbles, lots of investor enthusiasm already priced in.
@Laura Starks
There is no investor premium priced in, what balance sheet are you looking at? Tangible assets + cash are near 50 dollars a share. Their implied production in 2023 is probably at 13-15 gigawatts depending on when they announce Indian manufacturing. At 7-8 cents a watt in gross margin that is 6 dollars a share in eps.
Got a S-T buy signal this morning on hourly charts. Had divergent leadup. The sharp selloff from this morning's breakout levels IMHO gave good chance for entry.

Daily charts are hovering around the 200 day MA which was tested.

Longer term we had a 10 year bottoming process that we broke to the upside Sept / Oct 2020. Current prices are near that breakout level so technically, I an anticipating the longer term trend will continue to climb higher.

Hoping to get a bounce to clear the 50 day MA and keep it from a Bearish cross of 200 day.

Edit: Earnings risk around the corner in 10 days Apr 29th.

Laura Starks profile picture
This article from Wired on environmental cleanup after (note-rooftop, but same for utility-scale) solar panels reach end of life is interesting. Per its reports, FSLR is on this & already attentive to the issue, again to its credit. www.wired.com/...
Laura Starks profile picture
Worth noting (again) that to its credit, FSLR has been in the solar photovoltaic module manufacturing biz for over 20 years.
ESP equity research profile picture
@Laura Starks ;
Thanks for the FSLR article. A few points - FSLR is utility-scale solar - not rooftop: You stated:

"California scale-back of rooftop solar have dampened enthusiasm for the sector."

FSLR does not do rooftop. This would affect CSIQ, JKS, ENPH, and SEDG. Also, you list ENPH and SEDG as competitors of FSLR? They are not. both are in residential inverter space - not the solar panel space for Utilities.

You also state:
"Solar's appeal is obvious in the desert southwest of U.S. Solar technology is typically divided into thermal (rooftop collectors) and photovoltaic solar (electricity production) from companies like First Solar. "

?? this does not make sense - do you really understand the Solar industry? So rooftop solar is "thermal" ?? In today's market all the solar modules being deployed at PV - photovoltaic -, not thermal power - CSP:

FSLR is unique in that is thin firm solar, whereas the other tier 1 solar module players are silicon-based solar PV or Si-solar. FSLR used a compound - CdTe and has had some pushback over the years as the Cadmium is toxic - but the compound is not...

Another false statement:

"Challenges of using photovoltaic solar to make electricity are the need for new infrastructure (collectors, transmission lines"

One of the key advantages to Solar PV is that it is distributed - can be sited close to the electrical loads(demand) - so you need far less T&D infrastructure. The utility arrays can be near major highways and near large cities like las vegas:


I encourage you to do some more DD on the solar industry in general.

Laura Starks profile picture
@ESP equity research Point taken on thermal vs PV. Nonetheless, CA solar feeds into the grid, so yes, there is a utility effect. Plus CA is ground zero for all solar energy apps, residential, industrial or utility, so the state's solar policy matters a lot.
FSLR just sold its O&M group, which means, perhaps only that it no longer has the function, but O&M ties in with utility service, so it is interesting FSLR would part with it.
Re distribution-part of admin $2.3 trillion is for transmission--and utility-scale solar arrays are quite frequently sited far from population centers. The vast land requirements for utility-scale solar (and wind) means they are not found within city limits of, say, NYC, SF, or Washington DC.
ESP equity research profile picture
@Laura Starks :
"FSLR just sold its O&M group, which means, perhaps only that it no longer has the function, but O&M ties in with utility service, so it is interesting FSLR would part with it."

I have been against FSLR selling these Biz units - I know their reasons - that these do not have the same high margins as selling the series 6 module - but I like diversification in the revenues and earnings streams. Now they are "all in" with just making and selling the 6.

"The vast land requirements for utility-scale solar (and wind) means they are not found within city limits of, say, NYC, SF, or Washington DC."

Solar and wind can and do use "brownfield" Along interstates, C&I rooftop, water canals, parking lots, and can be DG - meaning 500kw hear, 1 MW there,etc..

I do not wish to sound rude - you do not seem to be very knowledgeable about renewables?

I like your oil and gas articles!

ESP equity research profile picture
@Laura Starks ;
To more fully understand how solar + wind can provide a high % of Powergen and actually be a healthier grid read my article below:


Hope this helps;

Was very FSLR-optimistic until about 3 months ago... Then I learned about SwiftSolar, Oxford PV, and the near-production-scale-maturity of perovskite modules. I sold and put it all into Meyer Burger.

A bit tricky since you need a broker with access to Switzerland's stock exchange, but its been a great ride so far and I am very confident it will go much higher over the next 1-3 years.
HardCovenant profile picture
@Landstad Meyer Burger about to break out? The chart looks sleepy
Own it, don’t trade it. CA isn’t going back on its rooftop. No way, Jose. Solar is 3% of energy right now and will only go higher from here. 70% and that’s being conservative. As panel costs decrease, revenues go up. Solar is already less expensive than oil. Buying solar stocks is an absolute no brainer. Biggest investment opportunity of a lifetime.
By the time any such event occurs the stock will have already moved. This article seems abit strange to me because it doesn't actually tell us anything new and it just raises arbitrary fears without addressing probabilities of those things.

For instance analysts around this company did the same thing when biden was elected, they raised fud around Biden taking down the tariffs. Here we are 3 months into the admin and he reaffirmed the bifacial ban, officially labeled what is happening in Xinjiang as genocide, and will most likely go a long with the expanding the section 201 tariffs.
Laura Starks profile picture
@srivaud The sector is off from its highs, which I found unusual given the big PR around solar and the very solid operations of this PV manufacturer. Sure, "buy the rumor," etc. But how do you cut the price of PV modules to reduce cost by 60% except by cutting the price/revenues to FSLR, etc? FSLR is certainly addressing its costs, but China is a very low-price competitor. Various levels of Chinese & US govt support for solar PV can be debated, but buyers do consider price, along with long-term performance/reliabity etc.
Plus any proposed dent in the key CA state market also substantially affects solar suppliers in the US.
@Laura Starks
I'm not sure why you would raise those questions without bring up, you know, any of the actual numbers.

Ultimately your article boils down to, "ooo spooky 60% cost decline." Which is incredibly lazy. The reality at the moment is that module costs have reached their nadir and there is an ongoing bifurcation between the tier 1 suppliers and tier 2/3, there will be increasing leverage around different module characteristics. For instance First Solar modules are more insurable due to being inherently immune to cell cracking.

When it comes to that announcement it's tied to 128 million dollars, it can happen if we get good heterojunction technology that pushes efficiencies above 30%, but outside of that 60% is not going to be possible. What's more important is the 10 year tax credit proposal with that tax credits being able to be exchanged for money.

Regardless I'm not going to write an article in the comments. I suggest you stay away from the stock and the sector in general.
Laura Starks profile picture
@srivaud looking for numbers in your reply and don't see them. Pls, do write an article...we all need more snarkiness in our lives. What you seem to have missed or not understood is that FSLR just sold off 2 parts of its business. Speaking of missing numbers, perhaps you have those transaction prices beyond the $140mm pretax estimate the company provided in Feb? I am not seeing them nor their segment profit/loss contributions, another reason for my suggestion to wait. Looking forward to your estimate of FSLR and solar sector future financials beyond those the company has presented. Bueller? Bueller?
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