Why First Solar's Shares Plunged


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 First Solar (NAS: FSLR) fell 16% today after Bloomberg reported that the company was stopping deliveries to its Agua Caliente project.

So what: The 397 MW project in Arizona is well ahead of schedule and construction will stop to meet contractual milestones, according to Bloomberg. The alarm by the market is due to the fact that First Solar has moved up shipments, recognizing revenue on the project maybe artificially early.

Now what: First Solar now relies on these big projects for demand and the worry is that it doesn't have enough demand elsewhere in the world to sell the product it will make this year. Construction at Agua Caliente will go forward in January as planned, but it leaves some question marks in the meantime. I think the 16% drop is a bit overdone, but the concerns by investors are very valid, so I wouldn't push all-in on First Solar today. The stock has been on a nice run lately, and if third-quarter results aren't affected by this move, I wouldn't be too alarmed by it.

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

The article Why First Solar's Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.