If there are any doubters that stocks of photovoltaic solar cell manufacturers are in a bubble or mania phase, let them look to the equities of First Solar, a company based in the heart of Arizona’s Valley of the Sun.
First Solar went public a year ago at $20 a share. Last week, the stock hit $230 — yes, $230. Stocks haven’t seen that kind of run-up since the days of the Internet bubble. FSLR closed last Thursday at $224.43, gaining $57.31 or 34% in one day. (The stock closed Monday at $177.70, after two down trading days; still, that’s up 789% from the IPO.)
Not even Google or VMware, the biggest tech IPOs of recent years, have enjoyed that kind of meteoric increase in value.
What set off the First Solar party late last week was the company’s release of its Q3 results and news that it plans to build more production capacity in Malaysia to help fill new orders for $1B worth of solar modules (or panels) over four years. (First Solar has factories in Germany and the US, as well.) Sales in Q3 were $159M, which is more than the company sold in all of 2006. More importantly, it had net income of $46M for the quarter.
That’s key information, as other solar power firms are having some troubles. The CEO of Conergy was forced to resign last week after the company went into the red and had to raise nearly $150M in capital to get through a cash shortfall. And LDK Solar has issues — silicon inventory issues, that is.
Aside from the gaudy numbers, what sets First Solar above the raft of solar cell companies that have gone public? It’s a fundamental issue of materials. Most photovoltaic solar cells are made on polysilicon wafers, much like integrated circuits. Polysilicon is in a worldwide supply shortage that may last into 2009. Some companies have turned to CIGS compounds as an alternative. First Solar uses a cadmium telluride thin film on a glass substrate for its products — cheaper and more widely available materials than poly or CIGS.
The irrational exuberance over solar power stocks is reflected in the IPO Scoreboard on Hoover’s. Four of the top 10 performing IPOs in the past 12 months are solar stocks — First Solar, Yingli Green Energy Holding, Trina Solar, and JA Solar Holdings.
So, investors, make hay while the sun shines. Just don’t whine when the sun sets and the bubble bursts.
Comments
Scott Ballard Says:
November 13th, 2007 at 10:05 am
Madness: We only have a few years, most scientist belief 8 years to
make any difference in global warming.
The conversations of the world should be PEAK oil: Solar is about to
reach grid parity. Most solar companies will do this by 2009, FSLR,
(Which I don’t have stock in, will do this next year.)
http://www.sunways.de/en/
http://www.andalay.net/cm/Home.html (Solar system: Pay back:5.4 years)
Oil prices could move permanently over $100 a barrel very soon. This
gloomy assessment comes from the International Energy Agency (IEA).
The IEA is well-respected within the industry and isn’t known for
alarmist warnings. In the IEA’s 2007 report, it argues that all
governments need to make urgent, bold decisions onenergy policy or
risk massive environmental and energy supply crises, within two
decades. Crises and shortages that could spark serious global
conflicts. “I am sorry to say this, but we are headed toward really
bad days,” IEA chief economist Fatih Birol was reported saying.
$200 a barrel is not out of the question. This should mean prices
related to oil will double. This also means Alternatives to gas will
be cheaper and surpass grid parity.
Ref: http://www.worldenergyoutlook.org/
Do you want to see real anarchy? If we don’t get solar panels on every
roof, Wind turbines and wave tech where we can and reduce our energy
consumption ASAP, that’s what we will have, Anarchy.
Thinking only about money and shorting stocks that can make a
difference is madness!
Better to have a little pushy resolve now in getting our communities
activated as if this was World War than to suffer in the future. This
is meant for the lazy and selfish, all others keep the push for Solar,
Wind, Wave tech, Energy efficient vehicles and reducing energy
consumption going strong NOW!
http://www.boveyclimateaction.org.uk/ is a small community action
group that is doing something now. You’re community can do the same.
Tim Smit Eden Project Chief Executive spoke at yesterdays Climate
Birthday Bash where over 200 hundred people attended. Other speakers
were Jonathon Porritt, Mark Edwards (of Hard Rain fame) and Mark Lynas
(author of 6 Degrees).
Tim Smit Said, ” A beach was covered with 1000’s of starfish that were
wash up on the beach from a storm. A lady was seen by a boy throwing
the starfish back into the sea. The boy said, ” why are you doing
that? It won’t make a difference.” She said, as she was through them
back into the sea, “It makes a difference to him, it makes a
difference to him and it makes a difference to him.” The boy got the
point and started to help.
Jeff Dorsch Says:
November 13th, 2007 at 10:21 am
Scott, you make some great points. Alternative energy sources have to be successfully developed in this century, because we are going to run out of fossil fuels at some point, and then there won’t be any oil, at any price. Thanks for your comment!
Reggie Rasmussen Says:
November 14th, 2007 at 1:46 pm
First solar has a great business model and there will always be a purchase market. But what about customers that are unable or unwilling to spend the kind of money that it takes to purchase. One company may be coming out with a solution to meet the needs of these people.
A company called citizenre is trying to take solar to he masses. They are marketing solar with an approach similar to satelite TV, cellular telephones, and alarm systems. That is to provide the customer a complete solar system with no upfront charges and make money from a service contract. In this case the service contract would be a rent agreement. They intend to put a complete solar system on a clients home. When the system produces electricity, it will lower the bill from the current utility provider. In most cases the savings from the lower bill will more than cover the rent fee that the company intends to charge. The company currently has no product available but intends to deploy in the middle of 2008. They are currently taking reservations and have 24,500 takers so far. I have written several articles on this company in my blog and even have a couple of vidoes that I have recorded at wwwsolarjoules.com. Feel free to take a look. I welcome comments. As in any start up business, a chance exists that they may never get off the ground and fulfill any preorders, but if this is the case - the potential client has not lost anything. If you cannot afford the upfront cost of solar today, this may turn out to be a great alternative.
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