Navigating the 21.2% Decline of First Solar: Investment Strategies Moving Forward

First Solar Inc. (FSLR) has seen its shares decline by 21.2% over the past six months, underperforming the Zacks solar industry’s decline of 19.3% and lagging the S&P 500’s growth of 0.3%. The company’s poor performance was primarily driven by disappointing first-quarter results for 2025, including an 11.4% year-over-year drop in earnings per share, as well as manufacturing issues and recently imposed tariffs. First Solar is projecting potential warranty charges between $56 million and $100 million due to these manufacturing problems.

In April 2025, a 10% tariff on solar module imports from several countries, including Vietnam and India, was announced, which may increase operational costs for First Solar, affecting its guidance for 2025. Despite these challenges, the Zacks Consensus Estimate forecasts revenue growth of 16.3% and 16.8% year-over-year for 2025 and 2026, respectively. However, earnings estimates have been revised downward, indicating reduced confidence from analysts.

First Solar’s current Price/Sales ratio stands at 2.92x, significantly higher than the industry average of 1.16x. Investors are advised to consider waiting for a more favorable entry point due to the company’s premium valuation and near-term risks, even while it continues to expand its manufacturing capacity in the U.S.