It’s a good day for JA Solar (JASO) but for solar as a whole, it’s not a great day. Much of that has to do with reports filed by Suntech Power (STP) and First Solar Inc. (FSLR) (two the world’s largest solar companies), warning about the potential for a significant hit to demand for solar and falling prices due to Europe government subsidy cuts. With Europe accounting for 80% of solar demand, the cuts could have a big impact particularly if the US, China and India don’t pick up the slack.
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"In light of continually evolving (feed-in tariff) structures in our core European markets, it is uncertain whether growing demand from other countries and markets could absorb industry-wide module supply without significant inventory build-up or price reductions," First Solar wrote in an annual 10-Q report filed with the SEC.
Shares of FSLR are off a few percent today and still like they want to test the next level of support around the $120 level. It’s important it hold there or we could be looking at a return to last year’s lows. Shares of STP are also down today and overall continue to look ambiguous to me, not really doing anything. Both stocks should continue to be avoided at this time.