First Solar (FSLR) Reverses Sharply AH On Germany Concerns; Conference Call Highlights

That was some reversal in First Solar (FSLR) after hours!  The stock ran up to over $190 following the headline results of the quarter in which the company absolutely destroyed estimates, but reversed sharply after the company revealed pricing pressure and financing constraints in Germany.  Frankly, I don’t understand the magnitude of the reversal after hours with the stock now down about 4% from the close.  Granted, Germany is an important market, but the company didn’t change its revenue and gross margin guidance for 2009 and is sticking with $1.9 – 2 billion and 31 – 33% respectively.  In addition, they expressed optimism over the French market which they are positioned well for with the EDF partnership.  It seems like an over reaction in my opinion.  It will be interesting to see the analyst notes tomorrow and the trading action during the day.  I’ll do my best to highlight the analyst notes ahead of the bell tomorrow, so be on the lookout for that.

Here are some highlights from earnings presentation which you can view here

– all Malaysia plants at full capacity (increased shipping volumes from plant 3 and 4)
– efficiency up just a bit at 10.9%
– manufacturing cost down to .87/watt, a 6% decrease over the year ago quarter
– gross margins up .4% over year ago quarter

– crystalline silicon oversupply
– deferred investments due to anticipation of further pricing pressure
– project debt constraints and delays
– financing constraints
– duration of these constraints are unknown but could be temporary
– rebate program enacted to spur demand where cost is the constraint

– great potential
– strong political leadership committed to renewable energy as highlighted by Grenelle
– wants be a leader in solar market

Regarding the EDF partnership..
– positions company for larger share of French market over time
– solidifies relationship with key customer


Disclosure: Long FSLR at 149.90 and 167.50 (added shares after the bell today)

4 thoughts on “First Solar (FSLR) Reverses Sharply AH On Germany Concerns; Conference Call Highlights”

  1. Pre-market is even worse, $166 at the mo. Germany is a worry with not much high end, German, quality being exported. So no new shiny solar panels on VW, BMW, Mercedes, Siemens, etc. factories and businesses. Lets hope for your sake doesnt drop further.

    Worth noting FSLR have 85 job openings, not bad for current climate. Still a buy in my opinion, but might wait to see what kind of profits are taken today.

  2. I really thought it would hold the 50dma around 167 today. The gap down and close at the lows probably sets up a test of the 140 – 150 area. I think a move to 100 would be a steal but that doesn’t look like a possibility now unless it breaks 140.

  3. There is an over reaction, Monday will back in the 160’s oil is high and silicon prices are about to go higher because of the wafer market will claim it’s share again. FSLR is still strong and just as a week ago the panic sellers still could not push it as down as predicted, Monday will be back to reality 160-167 .

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