When First Solar (NASDAQ:FSLR) first went public in November, 2006, I jumped at the opportunity to cover it.
At the time, it was all about new technologies that could reliably and economically compete with traditional silicon solar technology. Because back then, polysilicon wasn't cheap, and the Chinese hadn't taken control of the market yet with their significant production cost advantages.
The stock soared from a debut price of $24.50 to just over $300 by May, 2008. We made a ton of dough. And the truth is, actually backed away from the stock once it got into that $200 territory.
Of course, a lot has changed since then. Today, you can buy shares of First Solar for about $22. Chinese solar domination crushed pretty much every solar player outside of the Middle Kingdom, and a lot of investors had pretty much written First Solar off.
But while we'll never see $300 a share again, I've never been fully convinced that First Solar would go gently into that good night. The company has certainly taken its lumps, but it's not a bit player that lives and dies by the whims of Chinese subsidies and foolish fake conservatives on the campaign trail who vilify solar as a socialist agenda designed to break the US economy.
Truth is, it would be incorrect to categorize First Solar as another panel maker, anyway. The company is really turning into a vertically integrated energy company that now builds and operates power plants – using its own modules.
Earlier this week, we learned more about this transition in a Bloomberg article and interview with CEO Jim Hughes. Here's an excerpt from that piece. . .
First Solar Inc. (FSLR) Chief Executive Officer Jim Hughes is stepping up efforts to manage power plants that generate electricity from the sun, helping utilities use the technology in a way his rivals in China can’t.
The biggest U.S. solar panel maker plans to build new projects from the Middle East to Australia and use proprietary systems that help power-purchasers manage the amount they buy from solar farms, Hughes said in his first interview since taking the CEO position in May.
The company’s pitch to utilities is that it will help them predict uneven power flows from solar panels, giving grid operators the ability to integrate the facilities into their networks alongside those that burn fossil fuels. That’s making First Solar less dependent on manufacturing, an industry dominated by Chinese companies led by Suntech Power Holdings co. (STP).
“We’re still far ahead of them,” Hughes, 49, said at First Solar’s headquarters in Tempe, Arizona. “We’ll keep our distance and potentially expand it.”
Hughes’s comments are the most detailed explanation to date about First Solar’s strategic shift from a panel maker toward a vertically integrated energy company that builds and operates power plants using its solar modules. The company granted access to its flagship Agua Caliente project in Arizona and facilities where it’s working to perfect systems that monitor and route solar power to the grid.
Although I do believe First Solar will be one of only a dozen or so solar companies that'll still be in business by the end of the decade, we'll remain on the sidelines a bit longer. I'm just not ready to take on the risk in this space right now, and probably won't consider getting back in until sometime around the second half of next year.
You can read the entire Bloomberg article here.