First Solar surges 50% on sunny guidanceApril 9, 2013: 3:31 PM ET
First Solar shares spiked more than 50% Tuesday, rising to a new 52-week high and triggering several circuit breaker on the way up after the company issued a bullish forecast for the year.
The solar panel maker said it expects to earn between $4 and $4.50 per share, with annual sales between $3.8 billion and $4 billion. The guidance was well above analysts forecasts. Those polled by Thomson Reuters have been expecting earnings of $3.51 per share on revenue of $3.1 billion for 2013.
Part of the reason for the optimism? First Solar expects its 550 megawatt Desert Sunlight solar farm in Riverside, Calif., to start generating revenue later this year.
Shares of First Solar (FSLR) eased by late afternoon but still remained about 40% above the previous day's close.
Shares of fellow solar panel makers also gained. Suntech Power (STP) surged more than 30%, while SunPower (SPWR) and Yingli Green Energy Holdings (YGE) jumped about 20%. Canadian Solar (CSIQ) and MEMC Electronic Materials (WFR) rose 8%.
In addition to the guidance impact, shares of First Solar likely also surged because of a so-called short squeeze. The company's stock is heavily shorted, meaning that buyers have borrowed shares on a bet that the price will fall. As the stock rallies, short sellers rush in to buy shares to cover their short position before the stock heads even higher, hence the short squeeze.
Though First Solar's stock has bounced back from its all-time low hit last June, shares remain under pressure due to short interest as well as stiff competition from its Chinese rivals.