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November 9, 2007
First Solar: The Google of Cleantech?
This seems overdone in anything other than the most superficial way, but the year-long run at First Solar has some calling the cleantech company the Google of solar.
First Solar had an initial public offering in the middle of November 2006. The stock went out at $20 a share, so effectively, it has gone up in value by 11 times in a little less than a year. Google went out at $85 a few years ago and is now above $700. The numbers are bigger, but the multiple isn't.
First Solar's stock is being driven by rapid growth in revenue and profit. In the third quarter, revenue came to $159 million, more than triple the $40.8 million for the same period the year before. Revenue for the second quarter came to $77.2 million, so revenue essentially doubled in three months.
This is all true, as far as it goes, but it's worth pointing out that First Solar is selling cadmium telluride cells, which, while cheap, aren't exactly technology leaders. As more appropriate solar silicon production comes on-line over the next 12 months, it will be important to watch closely for the impact on cadmium telluride solar vendors.
Then again, despite its many critics, the solar market is exploding. There is ample room for vendors of all stripes, if they can sell in volume.
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I'm long on First Solar, but you're right that there is plenty of room for others to play in the solar market. There is still no definitive technology and there is increasing need for alternatives to PV-grade silicon feedstock. And just wait until nanosolar ramps up.
But it's good to see so many folks talking up First Solar; finally, the market is catching up with the rising sun of solar.
It is an extreme short squeeze (as if everyone doesn't know this). How quickly people forget.
I dont think FSLR is as strong as Google. Google was worth the hype and is not a one-trick pony. Their stock has risen gradually, and the multiple is not as outrageous as FSLR's.
Just think for a second, oil is not going to $150, not even $125. No one likes that. And Big Oil is too powerful to let the solar guys take over their business.
If shorts can handle a little pain, they have a sure winner; FSLR is going atleast to $100 in 3 months. I have put options for March 08 @ strike price of 100, and the volume on them is indicating the same.
The GOOG of solar was exact how I interpreted Cowen report, among others, issued Feb 14 after the company's first earnings report since the IPO. It is a bit played up here.