Pathikrit Bose
5 min read
In This Article:
If President Donald Trump’s “Big Beautiful Bill” passes, it would not be so beautiful for companies in the solar industry. This reality was evident in the meltdown that solar stocks witnessed on news that the Senate version of the bill looks to fully phase out both solar and wind power tax incentives by 2028.
So, where does that leave First Solar (FSLR), whose shares have corrected by nearly 18% already this year? In a pretty good place, if analysts are to be believed.
First Solar specializes in large-scale utility solar projects and integrated photovoltaic (PV) systems. The company designs, manufactures, and sells CdTe thin-film photovoltaic modules and is the only major solar manufacturer headquartered and producing in the U.S. Its market cap currently stands at $15.4 billion, making it one of the largest companies in the industry.
Now, there are some valid reasons for FSLR stock’s decline with the “Big Beautiful Bill” chief among them. With such legislation pending, investors fear that developers may cancel or delay new solar installations, shrinking First Solar’s total addressable market. Consequently, this may hurt project bookings and revenue visibility for First Solar.
However, I reckon First Solar’s correction has been overdone, and projections about its downturn extending further are misplaced. Why? Let’s have a closer look.
First Solar has had a tough time in recent quarters as its earnings have missed estimates, with the latest quarter even seeing the company’s earnings witness a yearly decline. However, its net sales did surpass the Street estimates and rose on an annual basis, accompanied by a decrease in short-term debt.
In Q1 2025, First Solar reported net revenues of $844.6 million, up 6.4% from the previous year. However, earnings of $1.95 per share reflected a yearly fall of 11.4%, missing the consensus estimate of $2.50 by a considerable margin. A yearly jump of 18.5% in total operating expenses to $123.2 million resulted in the sharp drop in profits.
First Solar also cut its revenue guidance for 2025 to be between $4.5 billion and $5.5 billion from prior estimates of $5.3 billion and $5.8 billion.
Net cash from operating activities was at a negative $607.9 million compared to the positive figure of $267.7 million in the year-ago period. However, First Solar closed the quarter with a cash balance of $837.6 million, which exceeded the company’s short-term and long-term debt levels of $197.2 million and $327.9 million.
