First Solar (NASDAQ: FSLR) has experienced a 14% year-to-date decline amidst changing energy policies, particularly as the U.S. Senate Finance Committee proposed a 60% cut to solar and wind energy tax credits starting in 2026, phasing them out entirely by 2028. With 93% of First Solar’s projected $4.2 billion revenue in 2024 linked to U.S. projects, this shift poses a significant threat to its profitability.
Despite missing forecasted earnings per share (EPS) of $2.50 by posting $1.95 in Q1 2025 and reporting revenues of $844.6 million against an expectation of $866.2 million, First Solar’s gross margins improved from 37% to 41%. The company’s operating margin stands at 33% with a robust operating cash flow of $1.2 billion, reflecting its strong operational execution and financial stability.
As of now, First Solar’s stock is priced around $145, with a P/E ratio of 12.2, significantly lower than the S&P 500’s 26.9. Despite its fundamentals being strong, First Solar remains sensitive to market downturns, falling 49.3% during the 2022 inflation shock compared to the S&P 500’s 25.4% drop. The company holds $891 million in cash, constituting 14.8% of its total assets, providing a liquidity buffer as it navigates these challenges.
