First Solar (NASDAQ: FSLR) led the pack of solar energy companies hammered today as concerns arose about the risk of an oversupply in the sector and repeal of European alternative energy subsidies. First Solar stock fell close to 20% today, from 159.71 to 128.00. First Solar has declined 36% from a week high of 197.50.
Goldman Sachs analyst Michael Molnar downgraded the company from buy to sell today. Molnar said that countries like Germany, where First Solar made significant entry due to the tax incentives utility companies had received from the governments, and Spain, where First Solar had begun to make similar headway, had suggested that due to the tough economy the subsidies would be allowed to sunset. First Solar and other solar energy companies would be left with unsold inventory.
Though Europe might withdraw the subsidy in the United States last week, solar energy companies received an eight year extension to the investment tax credit under the Emergency Economic Stabilizaton Act of 2008. The ITC would asist residential customers afford solar panels.
First Solar would not comment due to the quiet period before the third quarters earnings call.