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First Solar update

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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First Solar update

Hi, I may have missed the weekly cutoff time so no hurry answering this one. A few months ago I sold out of First Solar for a quick and decent profit but was thinking of diving back in at these prices. Does making America Great Again...again and tariffs put First Solar back into the opportunities space? I know you have long and bullish on this but was interested in how you see Trump policies impacting FSLR. Many Thanks Tim

Answer

Hi Tim,

First Solar (FSLR) has been struggling, in part because Trump is less supportive of renewables, and in part because they reported a weaker than hoped 3Q in October and downgraded FY24 guidance to boot.

In terms of Trump, he is big on protectionist policies that generally include tariffs on goods produced outside of the US. This is, in theory, is a positive offset for FSLR, which is the only company manufacturing solar panels on a large scale in the U.S., providing it with a unique distinction in the renewables space.

However, we think it’s clear that Trump’s win is a negative for renewables generally, and also taking the Senate creates further risk. The Inflation Reduction Act (IRA), which was a Biden initiative, provides big incentives for renewable companies and Trump has said he would wind this back, and to do this, having the numbers in the Senate was key. Complicating the issue though, is that the IRA has created a stack of jobs, largely in red states which should heap pressure on Trump to keep it in play (in some form) or put in place other policies to protect these jobs for those American’s who voted for him.

  • Distilling all this down, we believe in the company’s long-term future, and think the current pullback to ~$US170 is a buying opportunity, however, we preface this with position size. We have a 6% weighting in our International Companies Portfolio and would be more comfortable at a smaller 4% holding given the more complex environment that is now ahead of it.
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First Solar Inc (FSLR US)
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