Here’s Why DuPont Photovoltaic Volume Crushed Solar Stocks
Shares of DuPont (NYSE:DD) slid as much as 8.4 percent in morning trading on October 23. Total reported earnings per share clocked in at just $0.01, compared to $0.48 a year ago. The company cited weaker than expected demand in the photovoltaic market as a contributor to the decline. The news has thrown a curve ball at the already turbulent solar industry.
DuPont’s — and by extension the solar industry’s — low-demand problems arguably started with U.S. government initiatives aimed at creating jobs in the wake of recession, and bolstering renewable energy research and development. The strategy, to “pick winners” by supplying loans and other incentives to suppliers, has been widely debated and criticized. Fuel was added to the supply-side fire in an attempt to ignite the market. Recent reports suggest that pushing demand-side incentives instead could have done a better job, and may have helped prevent revenue losses reaching even to DuPont.
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Yingli Green Energy (NYSE:YGE) recently hosted an “Innovation Day” event that DuPont’s Photovoltaic Solutions China attended. The companies entered a strategic research agreement in February. Yingli is one of the many solar companies whose value has evaporated in the last year.
American manufacturers SunPower (NASDAQ:SPWR) and First Solar (NASDAQ:FSLR) are down on the news. First solar posted gains in the second week of October as it announced a series of new projects in the United States, India, and Middle East, but has come down this week as the industry shuffles along side a down market. As part of restructuring plans, SunPower has announced that it will cut as many as 900 workers from a plant in the Philippines. The news comes just after the company announced the completion of a massive solar system at the Naval Air Weapons China Like in California.
Federal involvement in the solar industry has been a touchy subject, particularly as the election season heats up. The industry has been dealing with overcapacity issues largely fueled by Chinese manufacturers, and the widely-publicized Solyndra has gone as far as calling the glut of supply a conspiracy against American companies. The U.S. government recently reiterated anti-dumping tariffs on Chinese solar panel imports, a move designed to add strength to a tenuous domestic industry. However, it will still be a while before supply and demand issues balance out, and the industry sees stability.
Some Chinese solar stocks like LDK Solar (NYSE:LDK) and Suntech Power Holdings (NYSE:STP) face concerns about being thrown off American exchanges because their share prices have dropped too low. LDK has been on the rise the last two days on news that it entered a share purchase agreement with Heng Rui Xin Energy that comes with 5 new board members for the company, suggesting a turn-around strategy.