What Happened?
Shares of solar panel manufacturer First Solar (NASDAQ:FSLR) fell 16.1% in the morning session after renewable energy stocks declined as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election.
For clean or renewable energy stocks, President-elect Trump is considered a headwind to their businesses. Specifically, his administration could lead to an overhaul of recent industry progress, including a repeal of President Biden’s Inflation Reduction Act. The IRA, as it's known, offers long-term tax credits for solar, wind, geothermal, and other renewable energy projects, often extending them for a decade. These tax credits offer stability and predictability, enabling companies to make long-term investment plans. For example, solar and wind energy developers benefit from a 30% investment tax credit (ITC), which can increase further if certain labor and domestic content standards are met.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy First Solar? Access our full analysis report here, it’s free.
What The Market Is Telling Us
First Solar’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for First Solar and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 8.5% on the news that Jefferies analyst Dushyant Ailani lowered the stock's price target from $271 to $266 and expects the company to underperform during the third-quarter earnings season, given lower volumes. He also expressed concerns regarding large-scale solar energy projects due to "long interconnection queues, supply chain, and labor shortages."
First Solar is up 13.3% since the beginning of the year, but at $195.08 per share, it is still trading 35.1% below its 52-week high of $300.71 from June 2024. Investors who bought $1,000 worth of First Solar’s shares 5 years ago would now be looking at an investment worth $3,656.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.