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.