First Solar (FSLR) Pressured On Exec Departure, Chanos Comments

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11:11:40 am on April 15, 2011

Shares of First Solar (FSLR) were under pressure a bit yesterday and took out key support of the 200 day moving average for the first time since last November after famed short seller Jim Chanos highlighted his bearish stance on the company on CNBC.   It was also announced that President of Operations Bruce Sohn has resigned.  TheStreet.com posted a nice article with analyst commentary if you’d like more details.  I’ll summarize here .. let’s start with Jim Chanos.

Chanos notes the large amount of insider selling going on which I noted in a post here about three weeks ago.  He also reiterates his generally bearish stance on the entire solar industry, not just First Solar, highlighting the fact solar isn’t yet a replacement for nat gas and coal.  Ok, no earth shattering judgements there as he states the obvious.  He also beats the dead horse bear argument of diminishing subsidies in Europe.  There really isn’t anything new in the Chanos argument which is probably why shares of FSLR didn’t sell off all that much. 

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Auriga analyst Mark Bachman agrees with the obvious from Chanos and indicates that a technological breakthrough in energy storage for intermittent energy sources like wind and solar is needed to better compete with nat gas and coal.  Most of the most bearish on alternative energy always indicate that solar and wind will never replace traditional energy sources which completely misses the point.  Alternative energy such as wind and solar will always be a supplement NOT a replacement.  The goal is incremental improvements in efficiency and storage technology so that a larger percentage of our energy needs come from alternative energy.  Bachman points out that the bigger issue for solar, at least in the shorter term, is what happens in Italy.  Until there is more clarity, solar stocks will remain in a holding pattern.

Ok, so what about the executive departure.  Most analysts don’t view this is a big deal and a natural evolution of the company after new CEO Rob Gillette brought in his own executive team.  There is concern that Sohn could be lured to GE, but there is a two year no compete clause.

In my opinion, this news on First Solar is a bit overblown, but it was the catalyst for a key breach of major support around the 200 day moving average.  If the stock can’t regain that level quickly, it could be an indication that the uptrend is over in shares of First Solar. 

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