What am I missing on FSLR? It's up big on good earnings, but the OTM puts are still selling at a high premium. Is there a reason to suspect that it's still going to tank in the near-term?
There are lots of reasons to suspect the solar sector is going to tank and the main reason is Ethanol. Traders are looking at FSLR like its PEIX. PEIX traded from the low teens to the high 40s in a short time last year. Then it came back to the teens just as quick. Everyone feels the solar industry is in a bubble just like Ethanol in 2006. However, not everything is the same each time around...like American Airlines and Delta Airlines. When Delta Airlines was trading in the low single digits, many traders got on board thinking it would dodge bankruptcy like American. Then Delta announced bankruptcy.
Dude, Stick to what you know, cause you don't know jack about renewable energy. Ethanol and Solar do not overlap. Ethanol is being pushed for autos, solar is pushed for the residential, commercial & industrial grid connected structures. Ethanol is subsidized heavier than any other form of energy, because it is complete bullsh*t. Solar is expensive, but it makes financial sense through the incentives, which are nowhere near what ethanol producers, refiners & growers get. What FSLR is, is overpriced beyond any logical valuation. Unless these guys have next gen technology that they can show to be competitive, they wont be able to sustain growth, or even be one of the major players in 5-10 years.
*I know* that ethanol and solar power are two totally different forms of renewable energy. However, what is similiar is the hype surrounding both types of energy. The solar and ethanol bubbles are very similiar although they have completely different functions.
I disagree. Ethanol is a scam, a way for Bush to route more of taxpayers moneys into the corporations like ADM. When worked out by numbers, it has to so heavily subsidized that it's just ridiculous. It also does not serve any environmental purpose, as it takes just as much dirty energy to process ethanol as the ethanol use saves. Let alone the environmental damage to the already lifeless soil. Solar is probably the cleanest renewable energy form with the cheapest maintenance. It is also quite versatile in its uses. The federal & state incentives toward it are structured in a different way, most of them were aimed at the average Joe, unlike the ethanol programs. It's gets pretty involved and I'm not gonna give a lesson without a consulting fee. Ethanol hype is based on what I consider embezzlement & cronyism. Solar hype is based on projections that leave a lot of realistic assumptions out of the picture. Some of these valuations just do not make sense. The base assumption is based on the projected goals by US Energy Department and the states. The problem is that companies like FSLR, ESLR, SPWR, etc. are using first gen technology. 2nd gen has yet to prove to be superior but people in the industry know that it's just a matter of time before thin film will beat the regular panel, let alone 3rd & 4th gen technology. And none of these companies, even the big energy guys like BP, Shell, Sanyo, Kyocera & Sharp have not justified enough investment into both of the gens, it's either one or the other. What can realistically happen is that FSLR can become a second rate solar manufacturer in 5 years. Still profitable, with some growth and decent market share but a second rate technology manufacturer. Wind power has been somewhat overlooked, but what is going on behind the scenes is very interesting. The players that really count have already confirmed where this whole trend is going.
I do have a few questions about the solar stocks. Its obvious to me why ESLR and CSIQ are not doing well. The obvious reason is either company cant turn a dime of profit during a time when there is a lot of solar demand. Not certain how ESLR stays in business. SOLF and JASO are the second tier solar stocks. SOLF seems like the dirty dog lately though and I cant figure that out. Lowest P/E of all the otehr solar stocks. I read through the last conference call for SOLF and nothing jumped out at my as negative. JASO's call seemed to be better received and thats reflected in how its trading. TSL and FSLR seem to be the first tier stocks. FSLR did beat expectations by 7 cents. Everyone expected zero. So what seperates JASO/SOLF from TSL/FSLR? Everytime I type in "solar power" into the news section of google there doesnt seem to be any shortage of bullish news and governments who want to mandate solar power.
I did do a little research into the issue. While I am not an expert on solar power, here are my candid observations: 1) The demand is there for solar energy and will continue. Go to google news and there is no shortage of articles. 2) The main problem is the silicon shortage and margins which will probably continue until 2010. 3) First Solar trades so high because they use thin-film technology and do not require silicon. So now the question remains if using this thin-film technology is worth the premium being placed on the FSLR stock. FSLR did beat the analyst expectations swinging to a profit. So it does they can deliver results.