HONOLULU, Hi. ( TheStreet) -- Tuesday was a day on which the frenzied trading in solar stocks turned broadly negative, except in the case of Hoku Scientific (HOKU). Hoku announced an amended agreement with SolarFun (SOLF) for its planned polysilicon plant in Idaho, and the news that Solarfun indeed would continue to fund the project, was a vote of confidence unlike any other that Hoku has had in...two months.
Hoku was up more than 20% in afternoon trading, and its volume was off the charts: more than 1 million shares traded versus an average volume of 83,000. The key issue for Hoku has for some time been the market's level of confidence in its ability to maintain a level of financing to complete the polysilicon plant and move to the production and shipping phase.
At the end of September, Hoku soared more than $1 in one day when it announced that Tianwei New Energy Holdings would provide a majority investment in Hoku and debt financing for the construction and development of Hoku's polysilicon production facility in Idaho.
On the Tianwei news, Hoku reached $3.36, though it quickly retreated to the $2 range as the financing outlook continued to layer a level of skepticism about Hoku's ability to complete the plant project."It's another vote of confidence," said Rob Stone, analyst at Cowen & Co. "It looks like Solarfun is going to stick around and this alleviates some concerns about how they would be able to keep the project together," Stone added. He noted that Solarfun's contract with Hoku is its second-largest -- Suntech (STP), which owns an equity stake in Hoku, has the largest contract for the new plant.