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First Solar’s Fall: Is a Rebound on the Horizon?

Ellis HobbsAvatar
Written by Ellis Hobbs Reviewed by Jack Kellogg Fact-checked by Tim Sykes
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First Solar Inc. is garnering investor confidence as it’s trading up by 4.73 percent on Thursday, potentially influenced by emerging opportunities in solar energy markets and increased demand for renewable energy solutions.

Key Financial Developments

  • Daiwa analyst Jonathan Kees revised First Solar’s price target to $210 from $230, citing Q3 operational challenges in India and maintaining an Outperform rating.

Candlestick Chart

Live Update At 14:31:40 EST: On Thursday, January 02, 2025 First Solar Inc. stock [NASDAQ: FSLR] is trending up by 4.73%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Jefferies adjusted First Solar’s target price from $257 to $248, while retaining a buy rating, indicating continued optimism.

  • Baird also revised its price target for First Solar to $267 from $307, maintaining an Outperform rating, with an average analyst overweight rating and mean target price of $278.17.

Recent Earnings and Financial Metrics

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First Solar Inc. has been navigating choppy waters lately, as reflected in its third-quarter performance. At the surface, the company’s ebit margin stands at a solid 35.6%, and an impressive gross margin of 46.5% shows robust cost-management. However, revenue growth seems to be tapering, with numbers revealing a 13.62% rise over three years – a figure not as stellar as in previous bursts of growth.

In terms of profitability, the solar titan posted profits from continuing operations of around $312.956M, but its free cash flow was notably negative at $487.653M. Meanwhile, while the enterprise value is pegged at $17.97B, hinting at market confidence, the price-to-cash flow ratio appears deeply concerning. This is, perhaps, a significant insight into liquidity management and funding capability – areas needing stricter oversight.

More Breaking News

Despite the headwinds, First Solar’s current market price at $180.52, fluctuating downward by 2.04%, indicates investors’ cautious stance awaiting promising forward guidance. Interestingly, their present order book filled till 2026 offers bright prospects for future demand fulfillment, crucial for sustaining growth momentum.

Dissecting Market Influences

First Solar’s stock journey is a tale every investor should lend an ear to, particularly with influences ranging from strategic outlooks to external market factors playing pivotal roles in price dynamics. The company’s commitment to scaling through engagements in emerging markets like India, though showing present operational cracks in the form of revisions and target price evaluations, exemplifies its resolve in pursuing long-term global acceleration.

In the financial sphere, analysts’ varying target price adjustments are telling of their perception of First Solar’s operational efficacy juxtaposed against market expectations. From Jefferies to Baird, the thin yet consistent thread of maintaining an outperform or buy rating illuminates optimism cloaked in temporary caution.

The balance sheet story corroborates this dual sentiment. With total liabilities positioned at roughly $3.842B against a commanding equity heft of $7.593B, First Solar harbors a formidable financial stance. Yet, with cash from operations languishing at a deficit, therein lies the intriguing paradox: strength obscured by short-term liquidity pressures historically instrumental in maneuvering economic obstacles.

Charting the Path Ahead

Viewing from a historical lens, First Solar Inc.’s trajectory in the stock market paints a canvas of potential and trials alike. The ups-and-downs, often a staple in the volatile realm of renewable energy stocks, are expected to persist but with a seasoned readiness for resurgence. Analysts have suggested that while the sky might not be entirely blue now, clouds do gather to hint at eventual sunshine following today’s investment climate.

One cannot ignore the global thrust towards sustainability, a wave on which First Solar rides with both anticipation and responsibility. As clean energy policies bolster future demand, and the company fine-tunes its operational levers, there might well be light at the end of this temporary financial tunnel.

Conclusion

First Solar Inc.’s current predicament on the economic map mirrors a complex intersection of ambition, internal obstacles, and broader market currents. In navigating these challenges, it’s essential for traders to heed the wisdom of seasoned professionals. As millionaire penny stock trader and teacher Tim Sykes says, “Cut losses quickly, let profits ride, and don’t overtrade.” The blend of steadfast analyst faith and compelling growth narratives paints a picture of anticipation for upward movement. Hence, potential rebounds seem plausible, perhaps awaiting just the right blend of operational efficiency and market sentiment to take flight once again.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”