Yingli Green Energy 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 panel maker Yingli Green Energy (NYS: YGE) are getting rained on today, plunging by as much as 10%, as fellow solar company Canadian Solar (NAS: CSIQ) said its gross margin will come in worse than expected.

So what: The comments have sparked a sell-off within the solar sector, including names like Suntech Power (NYS: STP) and also stateside counterparts like First Solar (NAS: FSLR) . Canadian Solar said its gross profit margin would likely be in the range of 2%-5%, compared to the previous guidance of 9%-12%.

Now what: Management attributed weak demand to customers waiting as long as possible before committing to purchases, which in turn is due to declining prices. Subsidies from important solar-using countries like Germany and Italy have been drying up, and the sector is plagued by oversupply, adding downward pressure on average selling prices. Solar stocks tend to move in lockstep with each other, and the recent cloudiness in the sector isn't making it easy.

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At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of First Solar.Motley Fool newsletter serviceshave recommended buying shares of First Solar. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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