Do Not Buy First Solar (FSLR) Into Earnings
April 29th, 2009 by 
CA Editors
Stephen Frankola sends: First Solar (FSLR) is set to release earnings after the market closes (any minute), and I believe that it will be hard for FSLR to impress the street. Their disappointing results last quarter led to a huge drop in share price.
During the last conference call, management cited economic headwinds and increased competition as risks to future performance. I don’t think either of those threats decreased materially over the past quarter, and I expect both to continue into the future.
The general business environment may improve as the world economy recovers and developed nations continue to become “greener,” but FSLR’s competition gets stiffer by the day. Solar has become commoditized, and both traditional silicon-based panels and other thin-film competitors will continue to erode demand for FSLR products.
The share price will likely be very volitile after this earnings release; a plesasant surprise will send shares skyward, while continued disappointment will drive shares lower. FSLR still trades at a premium valuation, and I believe that shares have plenty of room to fall.
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Note: Written and originally published by Stephen at TheDoNotBuyList.blogspot.com - a blog focused on negative analysis of companies.
See more Energy, FSLR, Short Stocks, Solar, Stephen Frankola | 
April 29th, 2009 at 4:20 pm
Nice call by an idiot. It blew earnings and is trading just like charts suggested.
April 29th, 2009 at 5:08 pm
right… did not account for the macro-market trend. the street just wants to see any company that is not going out of business right now (which is actually very few) and the stock is off to the races. any company who has been generally flat to -10% during this market dive of last 6months will probably not price perform very well because they don’t contrast well againest the macro-market.
April 29th, 2009 at 5:19 pm
Idiot, he is a moron, i have no freaking idea where he got his stats. plus everybody know first solar is the best in the market and will be for a while, every other company is laying off people and first solar is expanding and building.
i love it
looking for the 250 mark
April 30th, 2009 at 3:06 pm
Steve,
Step back and dig deeper into the company you are commenting on. FSLR has a cost roadmap that exceeds all in csi market. They have mastered manufacturing with lower cost and higher efficencies quarter after quarter. They acquired the Optisolar pipeline (could be > 1Gw)for just 3.5% dilution. They do not yet have these numbers in their forward ‘10 and ‘11 projections. The analyst’s that comment on their high sales or earnings multiples,should understand that the multiples are deserved based on unique growth rates, and the tendancy for management to be conservative, thus likely to exceed estimates.
Mike
May 4th, 2009 at 2:27 am
I regret my absense… I’ve been reading comments of my admittedly-poor call on other websites but forgot that the article may have gone up here.
Yep, i WAS wrong as my general theme was a downward movement, but I wrote “a pleasant surprise will send shares skyward.” I have been following FSLR for years and know how volatile it is, and I’ve never actually shorted it before earnings.
I did short it with an average cost of 270 before its peak. It then ran above $300 (as people like first solar fan [above] were likely calling for a rise to $1000 PPS) before rationality returned to stock’s valuation (and as the stock market as a whole declined). I covered in November around $140 as the stock was temporarily rallying strongly and I was scared of positive momentum.
Mike -
FSLR does have some competitive advantages, but I don’t think they justify the premium. As I have mentioned in previous posts, other (privately-held) thin-film startups are winning contracts alongside FSLR, so they don’t fully dominate that market. The silicon market is an entirely separate game, and declining costs in that market will continue to make those players more competitive. Evergreen Solar predicts that it’ll be producing (more efficient) panels at $1/watt by 2012 - whether or not that happens is anyone’s guess (and i’m not saying i’m recommending ESLR) but that’s just one example of competition that FSLR will continue to face. (Motley Fool article is the source of that ESLR stat.)
I congratulate speculators or investors that were long shares or options into earnings - you did well. Congratulations to FSLR management too - they managed to navigate the tough economic climate and beat all expectations. I just had a hard time rationalizing a purchased based on fundamentals then, and would continue to face the same dilemma now.
FSLR may indeed continue to perform well as a company and a stock, but it’s not where I’m putting my money. With a beta of more than 2, it’s a very volatile investment. In today’s market, I think that there are safer stocks that have the potential of returning 100% or equally-risky stocks with the potential of returning more than that… so I still can’t like FSLR even after their impressive quarterly report.