Best stock to invest in
Lessons From SunEdison, First Solar, and SolarCity
by Paula Mints
Currently SunEdison faces at least 15 lawsuits. SunEdison, Terraform
and other defendants asked to have the cases against them
Along with the lawsuits, from October 2015 through May 26 at least
20 security class actions have been filed against SunEdison its
subsidiaries, officials and underwriters. Many of these actions
relate to claims that investors were misled about the liquidity of
SunEdison, et al. Meanwhile, GCL-Poly wants to buy SunEdison’s
(MEMC) polysilicon business for $150-million and those in charge of
selling off the company bit by bit are eager to nail this bid down.
Comment: Potential buyers aren’t just circling overhead they
are diving swiftly in. Meanwhile, future investors in renewable
funds should learn to think very carefully before investing the
retirement funds of groups such as the Municipal Employee Retirement
System of Michigan.
The solar industry remains volatile and despite ongoing growth is
still subject to heartbreaking, dream shattering and retirement
income depleting crashes.
Lesson: SunEdison stands as a stark lesson in solar industry
bad behavior. Hubris encouraged Icarus to fly too close to the sun.
Overtime too many solar companies have followed his path up and
unfortunately met the same fate.
First Solar (FSLR)
In July First Solar finally pulled the plug on its crystalline
ambitions by announcing it would shutter TetraSun and convert the
manufacturing facility in Malaysia to CdTe production.
Comment: Well … First Solar tried CIGS and quietly pulled
the plug following at least two unsuccessful years and now it has
less quietly exited crystalline manufacturing after a couple of
years of assuring everyone that it would be very successful in this
regard. As a-Si production
is almost nonexistent hopefully the company will now focus 100% on
CdTe and continue with its world leadership in this regard.
Lesson: Hopefully First Solar has learned that shifting focus
from its core technology focus just results in a shifted focus
because it certainly has not resulted in revenue.
In SolarCity’s August earning call the company, meaning proud new
parent/owner Elon Musk spoke enthusiastically about Silevo’s new
custom BIPV product and basically ignored offering any details about
manufacturing delays and manufacturing cost. SolarCity announced a
gross profit of $118.8-million for 2015, operating losses of
$647.8-million and net losses of $768.8-million. SolarCity also
lowered its installation guidance for 2016.
Comment: Hmmm. So, SolarCity’s Silevo acquisition has shipped
nothing from its 1-GWp manufacturing facility and though it has
produced nothing and shipped nothing is announcing a new custom BIPV
product that will be more expensive to manufacture than the panels
it has yet to produce. SolarCity loses money on its sales business.
Daily there is an article or blog either announcing the
SolarCity/Tesla merger as evidence of the genius of Elon Musk or,
well, something entirely different from genius. Perhaps the genius
is to continue announcing grand plans followed by delays in grand
plans and to continue losing money while piling on the debt and
Lesson: The lesson is that the market loves a unicorn and
will embrace one even if it is an illusion. Sometimes all one can do
is watch in fascination.
Paula Mints is founder of SPV Market Research, a
classic solar market research practice focused on gathering data
through primary research and providing analyses of the global
solar industry. You can find her on Twitter @PaulaMints1
and read her blog here.
This article was originally published in the August 31st issue
a bimonthly executive report on the solar industry, and is
republished with permission.
– Best stock to invest in