Will Taxpayers Get Burned By First Solar? (FSLR, TAN, PBW)

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First Solar, Inc. (NASDAQ: FSLR) is getting crushed with an 9% loss in its stock this morning.  The move is on the heels of earnings and a much lowered expectation for 2012 sales.  The question to ask is not just whether or not the short sellers have more room to run on this one.  The question to ask is whether or not the taxpayers will get left hanging here.

Solyndra’s huge Department of Energy loan implosion was painful enough at about $500 million.  Most investors do not really focus on the notion that First Solar has a large amount of Department of Energy loans.  First Solar ended the most recent quarter with cash and marketable securities of $788 million.

Getting a live tally on all of the Department of Energy loan guarantees is a bit murky, but as of last June it was put around $4.5 billion to First Solar alone. That figure does include a current project, which is being sold. Sadly, shares were up around $140 at that time.

UBS has cut the price target to $40 on First Solar, while Citigroup cut the target down to $45.  LAst night came a report from Gordon Johnson of Axiom Capital on CNBC calling for this to remain a SELL with the potentiality of a total write-off being possible as the company will start to lose money next year.  The most extreme call is for a potential bankruptcy down the road, something we hope does not turn out to be the case.

If First Solar goes under, Solyndra could end up looking a small drop in the bucket.  This is not a situation that will be front and center today nor will it be in the coming weeks.   This is a longer-term concern, but still a valid concern.

The Guggenheim Solar ETF (NYSE: TAN) is down only 2.1% at $29.65 against an adjusted 52-week range of $24.20 to $89.00.  The PowerShares WilderHill Clean Energy (NYSE: PBW) ETF is down only 1.7% at $5.86 against a 52-week range of $4.80 to $10.88.  Frankly, it is surprising that these are not down worse.

First Solar shares are now down 9.8% at $32.80 and the volume of 5.6 million shares at 10:25 AM EST already has passed the average daily volume of 4.7 million shares.

JON C. OGG

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