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: Trina Solar and Yingli Green Energy have both fallen 11% today after Chinese solar competitor JA Solar reported earnings.
So what: JA shipped 500 MW worth of solar products, which topped its own estimate of 420 MW for the quarter. That led to revenues of $268.1 million, which topped Wall Street's estimate of $248.5 million. But the company lost $102.4 million, or 2.65 per share, when analysts only expected a $1.53 per share loss and investors sold off the whole industry as a result.
Now what: The core problem is that higher shipments did little to help the bottom line. In manufacturing, higher utilization should have a big impact on margins, but Chinese solar manufacturers are selling panels at such discounted prices that they still can't make a profit. I wouldn't buy any Chinese solar manufacturer and this is just the latest reason why.
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The article Why Solar Stocks Crashed Today originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. 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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