First Solar Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar cost-leader First Solar (NAS: FSLR) saw the sun set on a strong start to 2012 as it fell 10% on German feed-in tariff changes.

So what: The feed-in tariff system Germany implemented last year, with semiannual cuts based on installation levels, already appears to be out the window in favor of monthly cuts. German Environment Minister Norbert Roettgen said the country would transition to the monthly cuts, but for now details beyond that are sparse.

Now what: The idea of a cap on solar installations has been floated after the explosion of installations to end 2011, but the government is apparently leaning toward monthly cuts. I don't necessarily think this is a bad idea, but the constant changing of the rules in Germany is starting to make investors sick. Right now monthly cuts have the market spooked, but I wouldn't panic. China may be a larger market than Germany this year, and no matter how you slice it, Germany still wants to install more than 3.5 GW of solar annually, a healthy clip for the country.

Check back tomorrow for a more in-depth analysis of the potential changes.

Interested in more info on First Solar? Add it to your watchlist by clicking here.

At the time this article was published Fool contributor Travis Hoium owns shares of First Solar. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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In March 2008 analyst Dan Niles recommended this stock at the price of $205.15. Today it's $38.70. I opened a hypothetical portfolio on March 1 from Niles' recommendations that day in an interview on CNBC which also included
MEMC Electronic Materials (WFR) which was at $76.28, (now $4.66) and Applied Materials (AMAT) at $19.17 (now $12.31). In the past four years I have contiinued to see this analyst interviewed and allowed to make recommendations. Naturally, no one is committed to buy based on any analyst's say-so, (and I did not beyond the hypothetical) but it would be gratifying for once to hear from the CNBC talking heads something like, "Dan, 4 years ago you recommended............" and "Why should we allow you to tell us anything now?" I'm sure there are more examples like that out there....

January 19 2012 at 8:31 PM Report abuse rate up rate down Reply