Solar Power Booming, Solar Stocks Sucking — What is Going On?

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I’ve been seeing stuff here and there on solar stocks and controversial comments regarding solar or cleantech stocks. Now, I am not much of a stock market guy, so I’ve stayed out of the discussion, but a piece I read last night on MSNBC (which a loyal commenter also dropped in a comment this morning) really got my attention. Let’s start with the seemingly nonsensical issue…

  • solar power is growing like bamboo (meaning, really fast), solar costs are dropping like raindrops (again, really fast), and this is all expected to continue for many years (by just about everyone)
  • BUT solar stocks have been a total loser this year and Roberto Pedone noted recently: “Besides the banking sector post-2008 financial crisis, I can’t think of a group that’s as hated and despised as solar stocks…. For whatever reason, this entire complex has become a favorite target of short-sellers.”

Following up on this, Garvin Jabusch, cofounder of Green Alpha Advisors, LLC, and manager of The Sierra Club Green Alpha Portfolio, writes:

“For whatever reason” indeed. Solar is hated in spite of being the fastest-growing energy sector in the U.S. (67% 2010 growth; 66% growth just in the first quarter of 2011) and in the world (70% 2010 growth), and also even though its shares trade at very low valuations already. Take, for example, Green Alpha Advisors holding and China-based solar company LDK Solar. The company’s shares have fallen from $14.49 per share in February to $6.94 as of this writing. I can find no good fundamental reason for the decline: LDK’s latest quarterly earnings came in at $0.95 per share where consensus analyst expectations were $0.86; the company has year-on-year sales growth of 202%, a price-to-earnings ratio of only 2.22, plenty of cash on the balance sheet, and a price-to-book ratio of just 0.91. That’s right: Even if the company were closed and its assets liquidated, the cash generated at the yard sale would be greater than the current market cap, though the earnings should have value.

What gives?

What the heck is going on?

First of all, as I said above, I am not an expert in this arena, not in the least, and the questions above are not just rhetorical — I’m quite interested in learning more about what is going on.


When reading and thinking about this as a stock market outsider, a few ideas came to mind, but none of them seemed to really add up. Nonetheless, I’ll drop those below in a second. Beforehand, though, in reply to a post I wrote over on Earth & Industry on this topic, I got a comment on Twitter from someone who seemed to think he knew, without a doubt, the exact reason for this: “On wall street there is a concerted effort to destroy equity in solar stocks. conservative governments mean= < support.”

Jabusch leans towards the same argument, despite seeming bewildered by the situation as well:

Does Wall Street to some degree answer to the huge buckets of money represented by Big Oil? Yes. Is there therefore some effort under way to delay the inevitable solar-powered future? Possibly, but suffice it to say that Wall Street at least has enabled a culture that, against all economic and climactic evidence, loves fossil fuels and still views renewables as “alternative.” (Anecdotal but interesting on this point, on May 4, 2011, CNBC reported on-air that Arizona’s First Solar, a Green Alpha holding, missed its first-quarter earnings, when in fact the company’s earnings had beaten expectations by 15%. The stock plunged 10%.

Nice. Way to ignore success and create failure.

Another great comment from a Facebook fan (or follower, or whatever the term is these days):

Its called a political bantering – every republican on facebook has been bashing solar and wind for weeks now – it appears the party is making a concerted effort to destroy renewable energy – see the negative post on fb congress and senate pages

Summing up the general point, Jabusch writes: “Any way you slice it, the solar industry is currently very undervalued by analysts and traders….”

Now, aside from the above, some other possible reasons for the solar stock downfall have crossed my mind. Perhaps they are way off and I should just stick to the above (let me know):

  1. Word doesn’t adequately make it to traders that the solar energy industry is booming. As USA Today hypothesized yesterday, perhaps the solar industry has a PR problem. That seems harsh, especially for someone who reads and writes about this issues everyday (and is sort of like a solar industry PR employee), but perhaps there’s some truth in that.
  2. Perhaps, given the long-term certainty of solar energy’s growth, these traders are just playing games with the stock values in order to buy at an artificially low price and sell for a hefty profit.
  3. Perhaps, related to #1, traders are overhwelmed with the large number of solar companies and feel so uninformed on the technology and potential of each of them that they are preferring to stay away from and even shame solar stocks for now.

Some more good points/ideas have also already been added in the comments below.

Your thoughts?

Am I off the wall? Is this whole situation off the wall?

Related Stories on CleanTechnica:

  1. GE: Solar Power Cheaper than Fossil Fuels in 5 years
  2. U.S. Solar Energy Growth Continues to Crush Records (10 Key Findings)
  3. Solar Power Graphs to Make You Smile
  4. International Solar PV Nearly Doubled, PV Growth Doubled in 2010
  5. Cleantech’s Revolutionary Growth & Expectations for Coming 10 Years

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Zachary Shahan

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

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