Friday, May 6, 2011

Volatile Stock: First Solar (FSLR)

First Solar reported earnings earlier this week.  They beat estimates by about 15%, but investors weren't pleased with the outlook, which was the same as their guidance last quarter.  Talk about illogical!  Mr. Market is having big mood swings.  It was less than 3 months ago that the stock hit $175.  Now, it's $128.  This, ladies and gentlemen, is volatility for you!

Take a look at their earnings press release and also earnings call transcript.  I got a sense that Q2 will be another tough quarter, but sailing should be smoother in the second half.  Be prepared for a bumpy ride for the next few months.  On the bright side, some positive outlook they've given include 3.0 GW capacity by end of 2012 and cost per watt down in the $0.52 to $0.63 range by 2014.  This means their capacity would be doubled of what it is today in about 18 months.  In the meantime, I am planning on selling a naked put and maybe also buying some shares (both are bullish positions).