Bronte Gets Bearish On First Solar $FSLR
BronteCapital issued a report on why it’s short First Solar (FSLR) which bythe way recently broke through a nearly one year down trend and clearedthe 200 day moving average.
From a technical standpoint, it’s lookingincreasingly bullish, so the bearish case from Bronte is all the moreinteresting. Of course, if the market falls off a cliff from theselevels (and the Goldman Sachs (GS) news may make that a reality), thenall stocks will get hit including FSLR. Hat tip to Street Insider for the fullreport. Below are the highlights.
Bronte believes First Solar will go the way of a Palm or Garmin where their pioneering technology leads to a few years of tremendous growth(which has since passed) but market share erodes with competition,eventually becoming a commodity. They call FSLR a “fading growthstock.”
Regarding FSLR technology, they call the company’s thin film solarcells a “technological wonder”, but inferior in many ways to the morecommon polycrystalline cell. They highlight that FSLR cells are lessefficient, use more materials and degrade more over time compared topolysilicon. They also remind of the diminishing cost advantage thatFSLR once had due to plummeting poly prices. Finally, while they don’t see Applied Materials killing FSLR’s biz, they see the company as athreat.
I don’t see anything new in this argument outside of the AppMaterials threat and they are the same bearish arguments made when thestock was down around $100/share. As for polysilicon prices, they willturn up again as will the price of all scarce commodities. Sure, therewill always be competition in any growth industry, but comparing FSLR to Garmin and Palm is in my opinion ridiculous. I’ll take my cues fromthe technical action on FSLR which is bullish right now. The stock is a bit overdone in the short term and probably needs to pull back, but the $100 level sure looks like a longer term bottom.
Despite a plunging market today, FSLR is down just about 2.5% andholding at what is now support of the 200 day moving average.
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