The Unpredictable Solar Industry

There was news two days earlier that US and Europe may strike a deal with China, in order to prevent the solar trade wars. The deal would envisage that the Chinese manufacturers could keep the prices of the solar panels exported high while keeping the number of shipments in a limit. The Chinese companies in return, would no longer be charged high taxes on their exports of solar panels. This potential deal led to a surge in the solar stocks.

However according to yesterday’s news the potential deal did not turn out to be successful, hence there is no mutual understanding between the Chinese and the European Union. As a result of which the solar stocks plunged even lower. Solar stocks have a high short interest which means that any good news could result in a huge rise in prices. Any positive news in the industry leads to a price surge, even though it is not sustainable.  There was a Positive Solar Market Reaction following JASO and the solar stocks surged.

Prices of Solar Stocks May 16th – 22nd 2013

The above graph shows how the Solar industry reacted on the industry news in the two days time-frame. I have compared five  big solar companies like LDK Solar (LDK), JA Solar (JASO), Yingli Green (YGE), Suntech (STP) and Trina Solar (TSL). The prices of these popular stocks surged up on May 21st and then went down the next day.

Conclusion

Solar Stocks remain a very volatile segment to invest in. One requires a good amount of expertise and experience to be a solar investor. One news in the market and the stocks go haywire. In the middle of all this the investor gets confused and has no clue what to do – stay long, short or hold. All said, the solar industry has a lot of potential and a bright future ahead, it just needs a positive direction. There has surely been some hope in 2013, after the industry plunged into losses since 2008. Time has come when one needs to decide on the true light bearers of the solar industry and differentiate them from the pretenders. Hence the solar investor needs to be alert and assess each company’s performance before making a move.