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First Solar gets burned on stock offering

June 12, 2013: 10:54 AM ET

First Solar's stock has been on a tear this year.

Shares of First Solar cooled Wednesday after the solar panel maker said it planned to sell 8.5 million shares in a secondary stock offering.

Secondary offerings are always good news-bad news situations.

First the good news. First Solar's stock has rallied nearly 70% this year, ahead of the offering. Demand for solar panels has been growing. The company swung to a profit in the first quarter.

That creates prime conditions for the company to raise capital through a secondary offering -- a healthy and prudent move.

Now the bad news. Well, it's not really bad news per se. You'll often see a company's stock fall after a secondary offering because it increases the number of shares outstanding and cuts back, or dilutes, the ownership stakes for existing investors.

Investors are a fickle bunch. While it's probably a good thing in the long run, no one likes to see their ownership watered down.

All of this offered plenty of fodder for StockTwits traders to chew on.

Like the old days: $FSLR has EIGHT underwriters on shelf offering. THAT'S 1 way to ensure positive coverage!

Eight is great! But there are more analysts than underwriters for First Solar.

Maxim Group kept its sell rating on the stock and a $42 price target. They say the offering doesn't "meaningfully alter" their view of First Solar.

$FSLR so whos shorting here raise your hand?

Ha. Short interest is actually down about 15% in June. But looking at the ebbs and flows of bets on a stock decline, we'll probably see some shorts coming out of the woods soonish.

Maxim analysts were cautious about the stock offering. They say it will be "dilutive" to earnings, so that may attract some of those downside bettors.

Secondary sunburn. First Solar filed for 8.5 million share offering yesterday after bell.$FSLR down 6% pre-market.

That premarket move definitely wasn't looking pretty but the stock seems to be making a comeback. While it fell nearly 6% once trading opened, shares are now down only 2%.

"@xtremezz$FSLR Down in AH on stock offering but already bouncing. Needs 49.60 to confirm strength, though" A few tests of 49.60 and up up

The time to buy was at the worst time yday. Chasing without prior plan kills the account$SPY $FSLR

You know what they say: Hindsight is always 20-20.

Maxim thinks the company needs to be booking more business. The capital inflow will help First Solar bring some undeveloped projects to fruition but it remains to be seen whether that will be enough to offset the dilutive impact on its earnings.

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    - May 13, 2013 11:24 AM ET
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    Shares of First Solar (FSLR) soared nearly 11% to a new 52-week high early Wednesday, and other solar stock were quick to follow. Shares of SunPower (SPWR), LDK Solar (LDK), SolarCity (SCTY) and Canadian Solar (CSIQ) were all shining pretty brightly.

    Solar companies have struggled in recent years in the face of rising competition from cheaper solar panels manufactured in China.

    The future looked so dim MORE

    - Apr 24, 2013 12:48 PM ET
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    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.

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    Shares of First Solar plunged 17% Wednesday to their lowest level in three months after the company delivered disappointing fourth-quarter sales figures and a weak outlook for the first quarter.

    First Solar (FSLR) reported revenue of $1.1 billion for the last three months of 2012, falling short of the $1.3 billion that analysts were expecting. For the first quarter, the solar panel maker expects to earn between 70 cents and 90 MORE

    - Feb 27, 2013 1:38 PM ET
  • JPMorgan's stock to avoid in 2013: First Solar

    First Solar (FSLR) made JPMorgan's short list of stocks to avoid in 2013.

    In fact, the solar panel maker was the only stock to make the list. That's an unusual move for JPMorgan (JPM), whose equity stock analysts typically pick several stocks to avoid as part of their year-end roundup.

    First Solar earned this dubious distinction for the second year in a row, but to be fair, JPMorgan's analysts weren't exactly MORE

    - Dec 14, 2012 3:19 PM ET
  • Hated stocks finally get some hugs

    It's been a good week for heavily shorted stocks reporting earnings. I wrote (and did a video) Thursday about how Green Mountain Coffee Roasters (GMCR) surged despite poor guidance.

    First Solar (FSLR) was another company that popped on earnings news even though there are still many economic headwinds in the U.S. and Europe facing the maker of solar panels. That made it Thursday's Stupid Stock Move of the Day.

    #StupidStock Move of MORE

    - Aug 3, 2012 12:18 PM ET
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