While analysts are busy haggling over First Solar’s price — is it heading up or down? — the company got a potentially nasty sign that it could soon be heading south. Bloomberg reports that First Solar CEO Michael Ahearn, the company’s second largest shareholder, sold half his shares in May. The report says Ahearn cut his stake to 3.07 million shares, or 3.85 percent of the company, still worth $822 million, down from 6.1 million shares at the time of the company’s IPO in 2006.
Though Ahearn could be selling for any number of personal reasons, the CEO gave no explanation and declined to be interviewed for Bloomberg’s story. That’s no PR strategy. This morning, the company’s shares dropped almost 4 percent to around $257 — earlier this month shares sold for as high as $311.14.
Analysts have long said that the material that the company uses, cadmium telluride, could be a potential weak point. While the company was one of the first thin-film solar companies to market, cadmium can be toxic and could be banned by concerned European countries for use in solar cells. And companies are quickly starting to mass produce the next generation of thin-film solar material made from copper indium gallium selenide or CIGS.
First Solar has been solidly bringing in revenues since its IPO; it reported healthy earnings growth in April and a sunny forecast of $1 billion-plus revenue for this year. First Solar reported net earnings of $46.6 million, or 57 cents a share, for the three-month period ended March 29, a more than nine-fold increase from its profit of $5.03 million, or 7 cents a share, in the same period a year earlier. That shot the company’s stock up 8 percent.
But just the day after its earnings, First Solar’s stock not only gave up those gains, but fell to $263.35, which is 7.5 percent below its price before it announced its earnings. That was in response to two critical research reports from analysts at Oppenheimer and ThinkPanmure, both of which downgraded their ratings on the stock. ThinkPanmure’s Jonathan Hoopes cut his rating to accumulate from buy because of stiffer competition in the solar industry, especially among new technologies.